Oral Answers to Questions

FOREIGN AND COMMONWEALTH AFFAIRS

The Secretary of State was asked—

EU Accession

Jeff Ennis: What recent bilateral discussions he has had with those countries seeking entry into the EU.

Peter Hain: Between us, the Foreign Secretary and I have already met our Polish, Czech, Turkish, Hungarian, Romanian, Cypriot, Lithuanian, Latvian and Bulgarian counterparts. Our Government are champions of European enlargement.

Jeff Ennis: Independent research has shown that EU enlargement will add approximately £1.75 billion to our gross domestic product. Does the Minister agree that any opposition to EU enlargement, including from Opposition Members, is not in this country's interests?

Peter Hain: I very much agree with my hon. Friend. Enlargement is not just a favour for the applicant countries; it is a favour for ourselves. It is good for jobs and good for business. Every country that has come into the EU has increased its share of trade with Britain. It is also good for our security to bring additional members into the EU to co-operate on drug trafficking and anti-crime and anti-terrorism measures. That is why it is astonishing that Conservative Members voted against enlargement by opposing the Nice treaty. They have shown all the Polish, Cypriot and other communities in Britain that the Tories oppose their interests.

John Redwood: Why does the Minister not come clean and admit that the centralising power grab of the treaty of Nice has nothing do with enlargement and that the applicant states want to know what his solution to the problem of the common agricultural policy is? They want the money and they want us to pay. How will the hon. Gentleman solve that?

Peter Hain: The right hon. Gentleman is bewitched and besotted by his fanatical anti-Europeanism. The truth is that this Government have strongly supported CAP reform, which will be hastened by enlargement, and that is another very good reason why he should support it.

Jim Marshall: When my right hon. Friend met his Turkish counterpart to discuss Turkey's possible membership of the EU, did they mention the problems that now exist between the EU and NATO in respect of the EU's assured access to NATO assets in the event of the EU carrying out Petersberg- type tasks?

Peter Hain: My hon. Friend raises a very important issue. Indeed, the Foreign Secretary discussed it in some detail with his Turkish counterpart during his visit to Turkey only last month. I can report to the House that significant progress was made in a very important meeting at Ankara, which involved ourselves, as representatives of the EU, and the United States. We are confident that progress can now be made, although there are still some obstacles to overcome. It is in Turkey's interest that European security and defence policy proceeds, to have a good relationship with the EU and, eventually, we hope, to accede to membership, when it satisfies all the conditions.

Richard Spring: I remind the right hon. Gentleman that we clearly warned that all the extraneous baggage surrounding the Nice treaty might well delay enlargement. Given what has happened in Ireland and that it may happen again, what exactly is the fallback position on enlargement?

Peter Hain: It is very important that the Nice treaty is ratified by the House and, indeed, by Parliament to secure enlargement and to welcome our friends from Cyprus, Poland, Hungary and all the other applicant states to join the EU, as they wish to do. The Government of Ireland have yet to notify the EU and their colleague member states, including ourselves, about their own advice on how the question should be addressed, but the Government of Ireland very strongly support the Nice treaty and enlargement, and the Conservative party should take heed of that as well.

Ministerial Meetings (Pakistan)

Clive Betts: If he will make a statement on recent discussions with President Musharraf on the situation in Pakistan.

Jack Straw: I met President Musharraf on Friday 23 November in Islamabad. I expressed continuing appreciation for his courageous stand in the fight against terrorism and the practical assistance that Pakistan has provided. I discussed with him the situation in Pakistan and sought his advice on how best to achieve our shared objective of a broad-based multi-ethnic Government in Afghanistan.

Clive Betts: I thank my right hon. Friend for that reply, and I am sure that the House wants to congratulate President Musharraf on the support that he has given the coalition at this difficult time. In those discussions, I am sure that the issue of Kashmir was also raised with my right hon. Friend. I know that he is aware that many indigenous Kashmiris have been engaged in a struggle with the Indian army over the freedom of their country during past decades.
	Recently, some of those Kashmiris have most unfortunately chosen to side with terrorists in Afghanistan. I am sure that that action will be universally condemned, but will my right hon. Friend give an assurance that that action by some Kashmiris in Afghanistan will in no way change the British Government's policy, which is in favour of the right of the Kashmiri people to determine their own future? Does he agree that pressure should continue to be put on the Indian Government to ensure their compliance with UN resolutions passed more than 50 years ago?

Jack Straw: Sadly, on both sides of the line of control in Kashmir, thousands of innocent civilians—Muslim, Sikh, Hindu and people of no religion—as well as many members of the Indian armed forces have lost their lives. In our judgment, the Kashmir issue can be solved only by bilateral discussions between India and Pakistan. We are therefore encouraging the Government of India and the Government of Pakistan to resume the talks that they held in July in Agra. We would stand ready to provide assistance to those negotiations, but only in circumstances in which both sides agreed that our intervention would be helpful.

Martin Smyth: Although I welcome the stand that President Musharraf has taken hitherto, can the Foreign Secretary say whether there is any truth to reports from Afghanistan about Pakistani planes flying in to take people out? Might that not have an adverse effect on any settlement in Afghanistan?

Jack Straw: I have seen those reports, but I have seen no information that confirms their credibility.

Lorna Fitzsimons: Further to the question of my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) about Kashmir, can I press my right hon. Friend on the issue? Does he agree that, post-11 September, we must work with people across the world and, more important, with our constituents and with people of Kashmiri origin? We must also work with the peaceable people in Kashmir who have pacifically been trying to get United Nations resolutions implemented so that they can enjoy the democratic rights denied them by the failure of the Indian Government and, I am afraid to say, previous Pakistani Administrations, to act on the resolutions passed by international institutions such as the UN. All that those people want is a vote on whether Kashmir should be able to accede to India or to Pakistan. Although they believe that they have been done a great injustice, they do not want terrorists to act on their behalf.

Jack Straw: In the Kashmiri dispute, it is possible for both sides credibly to claim the support of various international and bilateral agreements. Typically, those on the Pakistani side of the line of control refer to the resolutions of the Security Council of the United Nations while those who support the position of the Indian Government claim that the Simla agreement in the early 1970s superseded the UN Security Council resolution of 50 years ago. The crucial point is that, in the real world, the dispute can be resolved only by bilateral negotiations between India and Pakistan. That is what we want to happen.

David Chidgey: Does the Foreign Secretary agree with the view now being expressed in the United Nations that the acceptance by Afghanistan of a multinational force is an essential ingredient of any stabilisation and aid package? If so, what part does he propose that British forces should play? If not, what option would he pursue?

Jack Straw: I discussed this matter with the President of Pakistan. There are various possibilities for outside assistance in terms of multilateral forces to assist any interim authority, and then a proper Government, in Afghanistan. However, our view is that decisions must wait until there is at least an interim authority that can offer consent to such a force. The role that British troops might play will depend on the nature of the tasks required and, of course, on the consent of any interim authority.

Tam Dalyell: What did President Musharraf say about bombing in Ramadan?

Jack Straw: As far as I recall, President Musharraf did not say anything about that.

European Security and Defence Initiative

John Wilkinson: When he last met his counterparts in the European Union to discuss future parliamentary scrutiny of the European security and defence initiative.

Peter Hain: At the General Affairs Council eight days ago.

John Wilkinson: I did not quite catch that reply, because it was a bit hurried and the Foreign Secretary was removing his brief from the Dispatch Box.
	Before the Government come to a judgment, will they examine the performance of the armed forces of European Union countries in the war against terrorism in Afghanistan? Before the intergovernmental conference, will the Government also assess the extremely effective role already played in European security and defence issues by the NATO Parliamentary Assembly, the Organisation for Security and Co-operation in Europe and the Assembly of the Western European Union? Surely, the IGC—and not now—is the right time and place to move things forward.

Peter Hain: I acknowledge and pay tribute to the hon. Gentleman's long-standing work as a member of the WEU Assembly and to his expertise in such matters. The issues that he raises are being considered. There is an embryonic European security and defence policy in place in operations in Macedonia, Bosnia and Kosovo where we are co-operating on an ad hoc basis with fellow European armed forces, and commanders from other member states sometimes command our forces. It is working very satisfactorily and we are learning a great deal from it, which will help the European Union to determine exactly how that capability can be made operational and contribute to peacekeeping humanitarian missions and crisis management.

Rachel Squire: I thank the hon. Member for Ruislip-Northwood (Mr. Wilkinson) for raising this issue following a conference that we both recently attended in Brussels.
	Does my right hon. Friend agree that the arrangements for national parliamentary scrutiny of European security and defence policy are inadequate and that we are at risk of being overtaken by the European Parliament, which does not appear to want to await the outcome of the IGC? Will he give priority to a full debate on that matter and the relevant Select Committee reports? Will he facilitate a discussion between the relevant Committees and Members of the House on the WEU, the OSCE and the NATO Parliamentary Assembly to consider improving our national parliamentary scrutiny of European security and defence policy developments?

Peter Hain: I will certainly consider the points raised by my hon. Friend, whose expertise is also valued by the House. We need to ensure that the initiative receives parliamentary scrutiny, that the discussions proceed and that the issue is addressed in the run-up to the IGC in 2004. We have no intention whatsoever of ceding scrutiny to the European Parliament. This is an intergovernmental matter that concerns the operational capacity of our troops, which is not something that we can cede to the European Parliament. We need national parliamentary supervision and accountability.

Zimbabwe

Nicholas Winterton: What recent representations he has made to the Government of Zimbabwe relating to the land redistribution programme.

Jack Straw: Land reform was one of the central issues in the Abuja negotiations in September. I raised it again with Zimbabwe's Foreign Minister, Mr. Mudenge, in New York on 10 November and my noble Friend Baroness Amos discussed it during the Commonwealth ministerial visit to Harare in October.
	At Abuja, Zimbabwe agreed that its land reform programme should be fair, just and sustainable and in the interest of all the people of Zimbabwe. It also committed itself to restore the rule of law to land reform and to respect the Commonwealth's Harare declaration. Its actions over the past three months show its scant regard for these commitments and have seriously undermined the Abuja agreement.
	The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Exeter (Mr. Bradshaw), set out Government policy on Zimbabwe in this morning's Westminster Hall debate. Let me emphasise again to the House that we remain profoundly concerned at recent developments in Zimbabwe, including violence against the Opposition, interference in the judicial system, moves to disfranchise Zimbabweans living overseas and, preposterously, labelling journalists as people who have been assisting terrorists. Our European Union and Commonwealth partners, and neighbouring states in southern Africa, share those concerns.
	At the 29 October General Affairs Council, the European Union therefore opened formal article 96 consultations with the Government of Zimbabwe under the Cotonou agreement. Cotonou states that if there is no progress within 75 days "appropriate measures" may be taken. A United Nations Development Programme technical team is now in Zimbabwe to look at the prospects for a credible land reform programme. Once its report is available, we will discuss it with Commonwealth and EU partners, and key donor countries including the US. We shall of course consult southern African countries as well. I will at that stage make a further statement to the House.

Nicholas Winterton: I sincerely thank the Foreign Secretary for that considered and lengthy reply. As he said, the Abuja undertakings are being flagrantly ignored by Mr. Mugabe and his Government. Farms continue to be invaded and farm workers murdered, hundreds of thousands of Zimbabweans face famine, and the country is disappearing down a black hole.
	Will the Foreign Secretary ensure that the EU and the Commonwealth work together to bring Mr. Mugabe and his Government to their senses? The most unfortunate development is that Mr. Mugabe has recently indicated that he will not allow independent monitors to observe the presidential election, which would be a disaster for that wonderful country.

Jack Straw: I appreciate the hon. Gentleman's concern, which is based on deep knowledge of Zimbabwe, and the manner in which he made his points. I have been concerned throughout to ensure that we work in partnership with Commonwealth countries, the European Union and other southern African countries. Apart from the poor people in Zimbabwe, who are suffering grievously from the results of President Mugabe's policies, it is the countries contiguous to Zimbabwe that are most affected by the disastrous economic and political management of Zimbabwe. We shall continue to work with all those partners.
	President Mugabe has to date refused to accept the involvement of election observers at the beginning of the electoral process, and not just at the end. We hope that he will change his mind, but I do not hold out much hope. What is striking about his refusal is that it appears to be in breach not only of various EU and Commonwealth declarations that he has signed, but of the declaration of detailed norms and standards for elections in the southern African region that he signed only last March and that specifically commits all southern African countries, including Zimbabwe, to the admission of independent election observers at the beginning of and throughout the process, and on polling day.

Win Griffiths: Given what appears to be the total disregard by President Mugabe for the Abuja agreement and all the other events in Zimbabwe, including the President calling members of the press "terrorists", at what point does my right hon. Friend think he will able to make a statement to the House saying that the Commonwealth has finally, alas, had to withdraw its recognition of Zimbabwe's membership?

Jack Straw: Such measures are, as my hon. Friend knows very well, a matter for the Commonwealth as a whole, not the United Kingdom. I will say only that nothing would play better with President Mugabe than if he were allowed to present the issue as one between black Zimbabwe and the old colonial ruler, the United Kingdom, rather than what it really is: a major issue of multinational and international concern.
	I spoke this morning to Don McKinnon, the Secretary-General of the Commonwealth, about the situation. We are likely to have a teleconference of the Commonwealth Ministers action group, of which I am a member in December, and a proper meeting in January, which should coincide with the end of the 75-day period under the article 96 process under Cotonou. In addition, we shall continue our discussions with southern African countries, because it is clear that there must be significant changes in the arrangements that President Mugabe is in practice willing to put in place for observers of the electoral process and for the process itself if that election is to carry any credibility with the rest of the world and with the voters of Zimbabwe.

Douglas Hogg: Surely the truth is that Mr. Mugabe's behaviour is now so gross that Zimbabwe should be excluded from the Commonwealth until he is removed from office.

Jack Straw: I understand the right hon. and learned Gentleman's concerns and instincts. We are all profoundly concerned about what has been happening, above all on behalf of the people of Zimbabwe, who have suffered badly from 80 per cent. inflation, a decline in the growth rate of what was once the bread basket of Africa and the impoverishment of what was a prosperous country. However, I counsel the right hon. Gentleman against suggesting that the United Kingdom take unilateral action, which would work to President Mugabe's benefit. The important thing is to work in partnership with the Commonwealth, the European Union and, above all, the southern African countries.

David Lammy: Does my right hon. Friend agree that there remains a need for balanced, fair and just reporting of the situation in Zimbabwe? Given what the Zimbabwean Government have said about foreign journalists aiding terrorists, what are the British Government doing to protect our journalists in Zimbabwe?

Jack Straw: We would actually do more to protect UK citizens who are journalists in Zimbabwe than we can to protect Zimbabwean citizens. The journalists whom President Mugabe portrayed as assisting terrorism were Zimbabwean citizens and should be mentioned for the great courage that they have shown in reporting the situation in Zimbabwe when faced with flagrant intimidation by people acting on behalf of President Mugabe and ZANU-PF. Following the reports, our high commissioner in Zimbabwe, Brian Donnelly, made strong representations at my specific request to the Zimbabwean Government. We continue to work with independent media, non-governmental organisations and others to ensure that as far as possible the media can report fairly and independently what is happening in Zimbabwe and that when they are prevented from doing so, the world knows.

Michael Ancram: Does the Foreign Secretary recall the Prime Minister telling the Labour party conference on 2 October that there would be
	"no tolerance of . . . the activities of Mr. Mugabe's henchmen in Zimbabwe."
	Does the Foreign Secretary agree that the situation in Zimbabwe is deteriorating daily, with acts of murder and violence committed by Mugabe's agents on those who seek democratically to oppose him? Has not the time for hand wringing and waffling passed and the time to act arrived? Why do the Government not take a lead in building a new international coalition that can make it clear to Mugabe that failure to hold free and fair elections, starting with putting international observers in now, as voter registration is taking place, will result in severe political and economic consequences for him and his regime? That would demonstrate that when the Prime Minister talks about no tolerance, he means it.

Jack Straw: We have just had a good example of hand wringing and waffle. The right hon. Gentleman should think carefully; building coalitions is exactly what we have been doing for months and was the purpose of the Abuja discussions. It was crucial that we broke away from the parody that President Mugabe had allowed himself to invent of a bilateral dispute between the United Kingdom and Zimbabwe when it was nothing of the kind. The Abuja declaration was crucial because Nigeria, South Africa, Kenya, Jamaica and old Commonwealth countries signed up to it. The discussions between President Mbeki and our Prime Minister were also important, as were the decision of the General Affairs Council of the European Union to move from article 8 to article 96 and the meeting last week with Commissioner Patten and High Representative Solana in Zimbabwe.
	We are making those moves along with our partners to ensure that there is a coalition. Unlike the previous Administration who, in the early 1980s, sat on their hands while more than 5,000 people were murdered in Matabeleland, we are taking effective action based on an international consensus.

Mr. Speaker: Before I call Question 5, I appeal for shorter questions and replies.

Coalition Against Terrorism

Syd Rapson: What assessment he has made of the continuing level of support by Muslim countries for the coalition against terrorism.

Laura Moffatt: What assessment he has made of the continuing support of the Muslim countries for the coalition against terrorism.

Ben Bradshaw: Muslim countries were among the first to condemn the 11 September attacks and support the campaign against terrorism. That support has strengthened further as they have witnessed the liberation of ordinary Afghans—fellow Muslims—oppressed so terribly and for so long by the Taliban.

Syd Rapson: I thank the Minister for that reply. Is he aware that in less than 30 years' time a quarter of the world's population will be Muslim? To gain their support, and more importantly, their trust, in our campaign against worldwide terrorism, a vital step must be the settlement of the middle east crisis. Can my right hon. Friend assure the House that everything humanly possible is being done to achieve that aim?

Ben Bradshaw: Yes, the United Kingdom has been strongly engaged in trying to find a way forward in the middle east peace process. We welcome the statement made last week by United States Secretary of State Colin Powell, and his dispatch of the two envoys to Israel yesterday. We recognise the importance of a solution in the middle east in terms of public opinion in the Arab and Muslim worlds, and we recognise the importance of public opinion in the Arab and Muslim worlds not just in international relations, but in our domestic politics.

Laura Moffatt: Ayatollah Ali Khamenei has clearly said that the actions of 11 September and associated activities are
	"neither connected to Islam, nor accepted by its principles."
	I know that my right hon. Friend the Foreign Secretary has been keeping in close contact with Iran. Following recent visits, can my hon. Friend assure us that those views still prevail?

Ben Bradshaw: Yes, I can. Many hon. Members will have been surprised by the strength of support for the campaign from some unlikely quarters, including Iran. Our relationships with Iran are extremely important. That is why my right hon. Friend the Foreign Secretary has made two visits there in the past two months—the first visits by a British Foreign Secretary since the Iranian revolution. Iran has an important role to play, particularly in the future peaceful solution in Afghanistan.

Menzies Campbell: How many of those Muslim countries would continue to support the coalition if military action were launched against Iraq, as has been foreshadowed in the past 24 hours, without incontrovertible evidence? Is it not likely that their support would simply melt away? Is it not the case that the further risk of military action against Iraq is that Saddam Hussein, as he did during the Gulf war, would launch missiles against Israel, which would feel compelled to retaliate, leading to the risk of conflagration throughout the middle east?

Ben Bradshaw: I do not think that it is helpful to speculate about the possible expansion of the current military campaign and its effects on public opinion in the Muslim world. The UK Government have always made it clear that the campaign is targeted and specific, and that its aim is to bring to justice those responsible for the mass murder of 11 September. Of course there are further obligations on all countries—not just Iraq, but the United Kingdom—as a result of the two unanimous UN resolutions passed since 11 September.

Crispin Blunt: While Pakistan's support for the coalition against terrorism is welcome, what assessment has the Minister made of the Pakistani intelligence service's continuing role in supporting terrorism in Kashmir?

Ben Bradshaw: We have done our utmost to urge the Pakistani Government to cease any support that they might have given in the past to the terrorists to whom the hon. Gentleman refers, and to cease any support that Pakistan has given through its intelligence service to the Taliban. We believe that Pakistan has undergone a sea change in its approach to those two issues, and we will continue to press the Pakistani Government to continue along the right path.

Malcolm Savidge: Will the Government make it clear to our US allies that the support of Muslim and other countries has been dependent on action being commensurate and directly related to the atrocity on 11 September, and that, although there are problems relating to various other countries that the international community must address in various ways, injudicious military action could forfeit international support and would not have the unconditional support of the Government?

Ben Bradshaw: People should not speculate about expanding the military campaign beyond bin Laden and al-Qaeda, in the absence of any evidence of any other state involvement. There is no evidence of any other state involvement, as far as we are aware. We have always made it clear that the military campaign is limited and specific. However, the United Nations resolutions passed unanimously since 11 September place serious obligations on a number of countries, including Iraq, and pretty stiff sanctions if they fail to fulfil them.

Alex Salmond: The Minister may not wish to speculate, but speculation is widespread and obviously has an impact on Muslim opinion worldwide. Can we have an unambiguous statement from him that it is not the policy of Her Majesty's Government to extend the military action and conflict to other states and countries without unambiguous evidence to that effect?

Ben Bradshaw: Yes.

Alice Mahon: I think that my hon. Friend has dodged around this issue. President Bush threatened Iraq yesterday with regard to the weapons inspections. Will my hon. Friend say unequivocally that we will not take part in bombing Iraq or any other Muslim country if America engages in bombing?

Ben Bradshaw: I would point out to my hon. Friend that Iraq could very easily solve the problem by adhering to the demands that are made of it by the United Nations. If Iraq implemented the United Nations resolutions, it would not find itself with this problem. I repeat to my hon. Friend that the UK Government's position has been absolutely clear all along during the military campaign, which is directed specifically against those who are responsible for the mass murder of 11 September. There is no evidence of any other state involvement. In the absence of any such evidence, those military objectives remain as they have been all along.

Alan Duncan: In commenting on the Foreign Secretary's visit to Iran and Pakistan, it grieves me ever so slightly that I have to say once again that I think that he has been doing the right thing. However, the continuing support of Pakistan and other Muslim countries very much will now depend on what happens next. On 4 October, the Foreign Secretary said that
	"there should be no safe haven for terrorists anywhere in the world."—[Official Report, 4 October 2001; Vol. 372, c. 689.]
	Notwithstanding the Minister's answer to the right hon. and learned Member for North-East Fife (Mr. Campbell), will he tell the House which other countries are now under suspicion? Which countries might require action of any sort by the coalition so that the objectives laid out by the Prime Minister and President Bush will be met? Are there any, or are there none?

Ben Bradshaw: I am afraid that I shall not read out a list of the countries that may or may not be involved in helping or supporting terrorist organisations within their borders. I point out to the hon. Gentleman, to whom I am grateful for his kind remarks about the activities of my right hon. Friend the Foreign Secretary, that the UN resolutions place pretty stiff requirements on all countries, including the United Kingdom. Many of the complaints that we get from countries throughout the world suggest that we have not been terribly good in the past at extraditing or dealing with suspected terrorists in this country. We all have obligations and duties under the UN resolutions, and I think that it would be invidious to start naming names.

Ernie Ross: Does my hon. Friend agree that, if we are to maintain the support of the Muslim countries, we must deal with the problems that concern them, such as Kashmir and the middle east? Does he also agree that the speech made by Colin Powell last week was very important in terms of ensuring that that is done? If we can keep the United States Government engaged, a strong signal will be sent to the middle east. Does my right hon. Friend agree that one of the most important things that Secretary of State Powell said was that the US stands ready to contribute towards an effective mechanism to monitor the peace between the two sides? Will my hon. Friend encourage him to move forward very quickly on that issue?

Ben Bradshaw: Yes, I would agree with everything that my hon. Friend says. We do indeed encourage the Americans to move forward on that issue. However, I should say as a warning that while we can address all the political and regional grievances in the world, history has unfortunately shown us that the world occasionally throws up madmen and despots who have to be stood up to.

Gibraltar

Tim Loughton: If he will make a statement on the future sovereignty of Gibraltar.

Lindsay Hoyle: If he will make a statement on his policy on the right of self-determination for overseas territories.

Jack Straw: The Government resumed talks with Spain under the Brussels process in July. We met again in Barcelona last Tuesday. In accordance with the terms of the Brussels communiqué that was agreed 17 years ago today, in November 1984, by the then Conservative Government, which included consideration of sovereignty, the talks are overcoming all the differences between the United Kingdom and Spain on Gibraltar. Our objective in relaunching these negotiations is to build a secure, stable and prosperous future for Gibraltar, greater self-government for the territory and better relations with Spain. We have invited the Chief Minister of Gibraltar to join the Brussels process meetings. Under the treaty of Utrecht, Spain has first refusal if the United Kingdom decides to relinquish sovereignty. We stand by the undertakings given in 1969 that the people of Gibraltar will have a right to vote on any proposal to transfer legal sovereignty.

Tim Loughton: For brevity's sake, I ask the Foreign Secretary for a simple yes or no. Will he continue to uphold the 1969 Gibraltar constitution and guarantee the right of the people of Gibraltar to remain British citizens, living in a British sovereign territory for as long as they determine?

Jack Straw: The answer is yes; I have just said that.

Lindsay Hoyle: Will my right hon. Friend confirm that overseas territories such as St. Helena will have the same right to self-determination as the Falkland Islands? The right exists in the preamble to their constitutions, but will it be included in the main text?

Jack Straw: We stand by the principle of self-determination. The extent to which it can be applied in practice depends on the legal position, and the basis on which the United Kingdom acquired the territory. In some cases, we were able agree to total independence; in others, that is not possible. However, in every case, we are committed to a high degree of internal self-government.

Patrick Cormack: Will the right hon. Gentleman give two undertakings? First, will he state unequivocally that this country will not unilaterally renounce sovereignty under the treaty of Utrecht? Secondly, will he assure us that any referendum in Gibraltar will be binding on the people and the Government of this country?

Jack Straw: I can only repeat what I have already said. We stand by the terms of the 1969 ordinance, the law of this country that provides that we shall not transfer sovereignty in Gibraltar without the consent of its people. I have said that three times in three minutes.
	I hope that Conservative Members will, like Lord Howe and Lady Thatcher 17 years ago, recognise that the day-to-day position is not satisfactory for Gibraltarians. Their complaints are against Spain; Spain has complaints about Gibraltar. The only way in which to resolve them and create a better future for the people of Gibraltar is by negotiation. In so far as it involves any transfer of sovereignty, it must be put to the people of Gibraltar.

Kevin McNamara: Will my right hon. Friend give an undertaking that, whatever the outcome of the talks with the Spanish Government, the people of Gibraltar will have the right to vote in the European elections?

Jack Straw: Yes.

Michael Ancram: Does the Foreign Secretary understand the genuine fears of the people of Gibraltar, which I witnessed last week, that a deal with Spain is being stitched up behind their backs and that there will be political and economic attempts to bounce them into accepting it?
	Does the right hon. Gentleman not accept that the people of Gibraltar do not wish their interests to be compromised in the current talks by being members of the United Kingdom delegation on only a consultative basis? Why will he not revert to the two flags, three voices formula, which would allow Gibraltar a true voice in the talks while preserving the status of the two sovereign Governments? Surely it is better to have Gibraltar participating in the agreements before they are put to a popular vote in a referendum.

Jack Straw: Of course it would be far better for the people of Gibraltar to be represented in the talks, and we have opened the door to participation in those talks on exactly the same basis as previous Administrations of which the right hon. Gentleman was a member. I understand the fears and anxieties of the people of Gibraltar. I am involved in the talks because I support a better future for them. Whatever the outcome on sovereignty, I want them to be able to exercise greater control over their daily lives and greater freedom over their actions. That requires negotiations between us and Spain. They would be greatly assisted by the participation of the Chief Minister; there is every reason for his participation. Unless the right hon. Gentleman is telling us—perhaps he should—that he is resiling from Lady Thatcher's agreement on the basis of the talks, they are the only way forward for the people of Gibraltar. The current position is not a good thing for them.

Michael Ancram: Is the Foreign Secretary therefore saying that he is offering the Gibraltar Administration the two flags, three voices formula? That is not their understanding. That was the formula offered by Lord Hurd when he was Foreign Secretary.
	On another matter, will the right hon. Gentleman come clean with the House as to whether joint or shared sovereignty in any shape or form is on the agenda of the current talks with Spain? Is he aware that joint sovereignty has rarely, if ever, proved a sound basis for stable settlements? Does he not understand that sovereignty shared is sovereignty abrogated and that, in the case of Gibraltar, it would be regarded as the start of a slow-motion ride to the surrender of British sovereignty? The people of Gibraltar will not see their British sovereignty surrendered by stealth, and they will not be browbeaten into abandoning it. We support them in that view.

Jack Straw: From that response, I take it that the right hon. Gentleman is now resiling from the Brussels agreement that was negotiated by Lady Thatcher 17 years ago and followed by every successive Conservative Government until 1997. The conditions that we have offered Chief Minister Caruana for participation in the talks will enable him to have his own voice alongside me at the table of the United Kingdom delegation, and the Spanish have accepted that they will respond directly to him. There is no reason for Chief Minister Caruana not to take part in the negotiations, and not to have full independence of expression in those meetings, as part of the United Kingdom delegation.
	On sovereignty, the position remains exactly as it was when Lord Howe spelled it out 17 years ago:
	"The process will be aimed at overcoming all differences between us over Gibraltar"—[Official Report, 28 November 1984; Vol. 68, c. 927]—
	and those include issues of sovereignty. That was Lord Howe's position 17 years ago, and it remains the position today.

Joyce Quin: I welcome my right hon. Friend's reaffirmation of the Government's commitment to the 1969 constitution. Given that Gibraltar, although small, has a distinct history and identity, will my right hon. Friend agree that it would be desirable for Spain to pursue a policy of positive co-operation with Gibraltar if it wants to see a change in the relationship, and that creating difficulties at the border and trying to block EU legislation on Gibraltar-related ground are counterproductive?

Jack Straw: I strongly agree with my right hon. Friend. That point has been pressed on the Spanish Government in the negotiations and outside, and a lot more remains to be done by the Spanish side. As a result of the negotiations, however, we have already had an allocation of 70,000 additional telephone lines for Gibraltar—on top of the 30,000 that it currently has. That is a tangible benefit for the people of Gibraltar as a result of the negotiations.

David Heath: That is welcome news, but does the right hon. Gentleman not agree that the attitude of the people of Gibraltar towards the Government of Spain would have been very different if they had not been subjected to nearly two decades of harassment at the border, in communications, and in terms of the airport and of NATO ships not being allowed to sail through Spanish waters to the sovereign base in Gibraltar? Will the right hon. Gentleman suggest to the Spanish Government that an early priority should be to sort out the status of the airport? Will he also suggest to his right hon. Friend the Home Secretary that another early priority should be to sort out the enfranchisement of the people of Gibraltar?

Jack Straw: The airport will be one of the matters on the table. The hon. Gentleman should be aware that, although the UK unquestionably has sovereignty over the rock of Gibraltar under the treaty of Utrecht, one complication in the negotiations when we come to the issue of sovereignty is that the legal basis for the UK's claim to the isthmus is different and has been challenged by Spain. Of course Gibraltarian people have a number of justified complaints about the way in which they have been treated by Spain, but it is also a fact that a number of complaints have been raised against Gibraltar by Spain and by the European Union and the Organisation for Economic Co-operation and Development, which require answers by Gibraltar.
	The best way to secure a better future for the people of Gibraltar is through the negotiations established 17 years ago by Lady Thatcher, which we have reopened, because the current situation of complaint and counter-charge and the people of Gibraltar increasingly being isolated is not in the interests of the people of Gibraltar.

Afghanistan

Betty Williams: If he will make a statement about his participation in the United Nations General Assembly in New York on Afghanistan.

Jack Straw: While at the UN, I spoke to the full Assembly on 11 November and subsequently at two Security Council meetings. I also held a number of meetings with Foreign Ministers, the UN Secretary-General and the Secretary-General's special representative for Afghanistan, Lakhdar Brahimi.

Betty Williams: In future discussions, will my right hon. Friend do all he can to ensure that full consideration is given to the women in Afghanistan, so that they are fully involved in international talks about a new Government; that the restoration of the rights of Afghan women is a high priority; and that boys and girls receive equal treatment when schools reopen?

Jack Straw: Yes. The oppression of women was one of the most terrible aspects of the Taliban regime. All parties to the Bonn discussions are committed to restoring rights for women and I am pleased to tell my hon. Friend that three of the 28 delegates due to attend are women. That is not enough, but the proportion is greater than that of women MPs representing the Conservative party.

Chris Grayling: Following President Bush's comments yesterday, will the Secretary of State please tell the House what discussions he had at the UN about UN weapons inspections in Iraq? What information do the Government have about the situation there in respect of the production of weapons of mass destruction?

Mr. Speaker: Order. The question is about Afghanistan.

George Howarth: Has my right hon. Friend seen the recent press reports about the upsurge in poppy field planting in Afghanistan in recent weeks? Will he enlist the support of colleagues in the UN to make it clear to whatever regime emerges in Afghanistan that poppy planting and the heroin trade that stems from it are wholly unacceptable?

Jack Straw: I certainly will, and I have done so already. A key part of restoring the rule of law in Afghanistan is the eradication of poppy cultivation and the heroin trade. That forms a central part of all the discussions in which we are engaged.

Nicholas Soames: Is it the intention of the Foreign Secretary, on behalf of the Government, that the major part of the planning for the overall reconstruction of Afghanistan be conducted through the UN, or does he envisage it being conducted through other organisations?

Jack Straw: Overall supervision of the reconstruction of Afghanistan must be conducted under the aegis of the UN, providing the framework and umbrella for discussions. Of course, a great deal of action will be taken multilaterally and bilaterally to support Afghanistan. As the hon. Gentleman is aware, my right hon. Friend the Secretary of State for International Development is already in the vanguard in ensuring that there is additional support for Afghanistan and for Pakistan and Iran.

Terrorism

Oona King: If he will make a statement on his Department's definition of terrorism.

Denis MacShane: I draw my hon. Friend's attention to the definition of terrorism in part I of the Terrorism Act 2000, which refers to the use of violence to intimidate the public for the purpose of advancing a political, religious or ideological cause.

Oona King: Does my hon. Friend agree that any definition of terrorism must include the deliberate targeting of civilians? Does that not have implications for state activity that might fall within the definition? In the middle east, for example, while Hamas is obviously a terrorist organisation, is it not chilling that an Israeli tribunal has found Ariel Sharon responsible for the deaths of hundreds of Palestinian civilians? Can we look forward to a more consistent application of the definition post- 11 September?

Denis MacShane: My hon. Friend might reflect on the fact that when acts committed other than by non-state organisations are then condemned by tribunals and public opinion, that shows democracy at work. We are now talking about terrorism in 2001. We are talking about non-state organisations that commit wicked, godless crimes to intimidate people and destroy civilian life for political ends. That is unacceptable, and that is what we should concentrate on fighting.

Henry Bellingham: Does the Minister agree that it is illogical to try to distinguish between foreign and local terrorists? That, surely, is exactly what the Bill currently before Parliament has tried to do. What representations has the Minister made to the Home Secretary asking him to examine the illogicality?

Denis MacShane: As there is no illogicality, the answer is none.

Middle East

Roger Casale: What assessment he has made of the prospects for renewing the peace process in the middle east; and if he will make a statement.

Ben Bradshaw: The UK remains engaged, with its EU partners and the US, in efforts to reinvigorate the middle east peace process. I particularly welcomed United States Secretary of State Colin Powell's speech last week, which set out the US Administration's vision of a comprehensive settlement, and the arrival of the two US envoys Bill Burns and General Zinni in the region yesterday. That represents an important opportunity for the process to be taken forward.

Roger Casale: My hon. Friend will know that the historical record demands, as recent events dictate, that Britain and Europe show leadership, along with the United States, in the century-long search for lasting peace and stability in the middle east. We failed after the first world war and the break-up of the Ottoman empire; we failed after the second world war; and we failed after the Gulf crisis, despite the promise of the Mitchell report and the Oslo accord. Does my hon. Friend agree that only a just settlement can produce lasting peace in the middle east, and that in order to be just, the settlement must take account of the legitimate claims of all the historic peoples of the middle east?

Ben Bradshaw: Yes, and yes.

Geoffrey Clifton-Brown: Does not Israeli Foreign Minister Peres's statement that there is now broad agreement that a Palestinian state should be created represent a significant step towards a middle east peace settlement?

Ben Bradshaw: Yes, I think it is an important step. As my hon. Friend the Member for Wimbledon (Roger Casale) says, we have a good opportunity to make progress post-11 September. As I think all Members realise, it will not be easy, but we are working hard towards that end.

Richard Burden: If we are to promote a just settlement in the middle east, is it not important for us to demonstrate consistency in our application of international law? Must we not continue to say that Israeli settlements are illegal? Should we not also say, as a European Union, that we would object to Israel's exporting goods from illegal settlements to the EU on the pretext that they were made in Israel?

Ben Bradshaw: Yes. We are making progress in regard to imports from illegal settlements. Moreover, as my hon. Friend suggests, we continue to remind the Israelis that the settlements are illegal. In the end they will have to be dismantled. Their continuing growth does absolutely nothing to further the cause of peace in the middle east.

EU Enlargement

Tom Brake: If he will make a statement on the progress being made towards EU enlargement.

Peter Hain: The enlargement negotiations continue to make good progress, enabling candidates that are ready to join the EU to do so by 2004.

Tom Brake: I welcome the Minister's response and the progress that is being made on accession. On Cyprus, will the Minister confirm that he agrees with Gunter Verheugen, the European Commissioner with responsibility for enlargement, that our strategic goal is to take a united Cyprus as a new member, and that reaching that goal requires constructive and substantial progress towards a lasting solution? What does he think constitutes substantial and constructive progress?

Peter Hain: I confirm that we strongly endorse the European objective of accepting a united island into the European Union as part of the enlargement process. The Cypriots want to join. If the island were not united, we would still accept Cyprus's entrance to the European Union. We would not allow anyone to veto that provided that the Cypriots had completed the full process of negotiation and closed all the chapters. Currently they are in the lead among all the applicant countries in doing so.

Pre-Budget Report

Gordon Brown: The task of this pre-Budget report is to rise to the global economic challenge facing this country and to set out how, upon a foundation of stability and growth, we can and will build a stronger and fairer Britain even in an uncertain world.
	I start with the state of the world economy. America is in recession, as are Japan and other Asian economies such as Singapore, Taiwan and Hong Kong. The euro area is slowing rapidly. World trade growth has slowed dramatically, from 12 per cent. last year to only 1 per cent. this year. Growth among the main G7 economies is expected to slow, from 3½ per cent. last year, to just 1 per cent. this year. Indeed, for the first time in three decades, each region of the world has slowed at one and the same time and more sharply than before. Independent forecasters expect the world downturn to be deeper and longer, with economic growth in 2002 of just 1½ per cent. in the euro area, 0.7 per cent. in the USA, and minus 0.6 per cent. in Japan.
	No one country can insulate its economy from such a synchronised slowdown. In addition, no one can yet judge the full and final impact of the traumatic and tragic events of 11 September. These testing times demand decisive action. Therefore, in Britain, interest rates have been cut seven times in nine months, and Britain's interest rates are now the lowest for nearly 40 years. With public spending and public investment increasing this year, our fiscal policy is—at the right time of the economic cycle—complementing and supporting monetary policy and thus supporting stability and growth.
	In the past, when the main economies of the industrialised world have gone into a downturn, Britain has invariably come off worst. Indeed, in every major global slowdown since 1945, Britain has entered weaker, suffered longer, experienced higher inflation and endured higher unemployment. So it is at a time like this that our new monetary and fiscal regime—Bank of England independence, the symmetrical inflation target, our new fiscal rules and the tough decisions we have taken to reduce debt—is being tested.
	When the world turned down in 1998, decisive action by the newly independent Bank of England ensured that the British economy sustained its growth. Throughout 2001 Britain has continued to grow, and monetary policy has played its full part. First, the Bank of England has been able to take pre-emptive action because British inflation has been at or near our target of 2½ per cent. for four years, by contrast with inflation increasing to 10 per cent. when the world economy slowed last, in 1990. In the past two years, Britain has had the lowest annual inflation rate since 1963. Indeed, our average inflation has been lower than that of any comparable country in Europe.
	Secondly, the symmetrical inflation target which was set in 1997 at 2½ per cent. means that inflation below that figure is as undesirable as inflation above it. Deflation is as unacceptable as inflation. It is because, in 1997, we put in place a symmetrical target—one that is pro-growth as well as anti-inflation—that, whereas Britain was unable to act decisively or acted too late at every other time since 1945 when the world faced a slowdown, this time the Bank of England has been able to adjust policy at the right time and in the right way to safeguard both economic stability and growth. Consequently, during this world slowdown, our interest rates are now 4 per cent., by contrast with interest rates of 10 per cent—and 15 per cent. for one whole year—during the boom and bust of a decade ago.
	I come to the forecasts for growth. At the time of last year's pre-Budget report, independent forecasters said that United States growth in 2001 would be 3.4 per cent.—they now expect it to be just 1 per cent. For Germany, they expected growth of 3 per cent: now actual growth is expected to be 0.7 per cent. For Japan, they expected growth of 2 per cent: now actual growth is expected to be minus 0.5 per cent.
	Last year, we forecast that British growth in 2001 would come in at a range from 2¼ per cent. to 2¾ per cent., and we based our public finance projections on 2¼ per cent. I can tell the House that our expected growth figure this year is exactly that—2¼ per cent. So while some pre-Budget representations to me claimed that Britain was worst placed of any country to withstand the global slowdown, in fact the OECD and IMF have both forecast that Britain this year will have the highest growth of any of the G7 countries.
	In the period ahead there are of course real risks for both Britain and the world. But it is because of the decisive action taken on monetary and fiscal policy that I remain cautiously optimistic about the prospects for the British economy. While next year independent forecasts expect the United States to grow by less than 1 per cent. and the euro area to grow by just over 1 per cent, we now forecast British growth next year of 2 per cent. to 2½ per cent., and then to rise in 2003 to 2¾ per cent. to 3¼ per cent. as the economy returns to trend in 2004.
	While the British economy has been stable, it can and must be stronger. All countries are having to respond to unique economic circumstances: an overshoot and then a collapse in information technology investment in the United States and then in IT production, which are both down 12 per cent., a downturn that contributed to falling industrial production as a whole—it is now down 4.3 per cent. across the G7—and then a dramatic slowdown in world trade in industrial goods from 13 per cent. growth last year to almost zero now, along with the large increase in business uncertainty since 11 September.
	With manufacturing output having fallen across the world—by an estimated 5 per cent. in the G7 countries—British manufacturing output has fallen over the same period by 2 per cent., after rising by 2 per cent. in 2000. There are consequent effects for both exports and imports and for business investment, whose share of national income none the less continues near an all-time high. The challenge for Britain—for manufacturing and across the economy—is both to maintain our hard won stability and to accelerate the productivity improvements that will increase output, jobs and wealth.
	The global risks which demand continuing vigilance are both cyclical and structural. There are downside risks if America takes longer to recover or if there is a long-term change in oil prices or long-term changes in company or consumer behaviour after 11 September; that would lead to a much more uncertain world economy in which Britain would have to work even harder to make our productivity gains. Further out, there are upside risks of inflationary pressures if, as a result of lower interest rates, consumer spending grows too quickly, but there is also an upside opportunity for growth if world recovery is accompanied here in Britain by productivity improvements.
	So—far from deferring our enterprise agenda—this is exactly the right time to press ahead with supply side reforms to encourage new investment and higher productivity, and it is now right that we take forward the measures on enterprise on which we have been consulting. Further statements on manufacturing will be made in the next few days by the Secretary of State for Trade and Industry, and on the reform of our planning laws by the Secretary of State for Transport, Local Government and the Regions, with proposals to increase the flexibility, speed and responsiveness of the planning land use system.
	Today, I can tell the House that we will proceed with four tax cuts for enterprise and the abolition of one further tax in its entirety. To help British business, and particularly manufacturers, to invest in the technologies of the future, I have decided following consultation that we will in next year's Finance Bill legislate for a new research and development tax credit for large companies, which is a tax cut to boost innovation. To increase investment and reward entrepreneurship, we will from next April make a second tax cut—a cut in capital gains tax to 20 per cent. for business assets held for more than one year and only 10 per cent. for business assets held for two. Three quarters of taxpayers with business assets will pay only a 10p rate—overall a capital gains tax regime more favourable to enterprise than that of the United States.
	To reward managers taking risks in new business ventures, I now propose to double the reach of our share option scheme to all businesses with assets of up to £30 million—a tax incentive that I will introduce immediately.
	Because, for small businesses, I want to cut tax bills and red tape, I can confirm that the Budget will extend the 10p corporation tax band, cutting taxes for small companies, and that from April a new flat-rate and simplified scheme for payment of value added tax will both cut form filling and save a typical small business up to £1,000 a year. There is a strong case also for cash help for small firms to bring their payroll and tax systems online, and I am publishing today, and consulting on, the Carter review.
	In each year since 1997, I have abolished at least one tax, most recently abolishing betting duty. For 54 years since the 1947 Budget, tax has been levied on the football pools. I have agreed that the tax on pool companies will be 15 per cent. on their gross profits but, after an agreement with the industry that guarantees the continuation of its funding of the Football Foundation and the Foundation for Sport and the Arts, I am abolishing football pools tax altogether.
	This change will take effect from 1 April and, just as people no longer have to pay tax when they bet, they will no longer have to pay tax when they do the pools. Every charity or local sports club that runs pools based competitions will see its tax liability abolished too. And the details of our consultation on the tax status of amateur sports clubs will be announced by my right hon. Friends the Minister for Sport and the Financial Secretary to the Treasury on Friday.
	I turn now to jobs. Today, my right hon. Friend the Secretary of State for Trade and Industry and I are publishing our joint report on regional economic policy and on the work of regional development agencies—set up by my right hon. Friend the Deputy Prime Minister—to tackle regional inequalities and achieve balanced economic growth across the United Kingdom.
	The key focus is on local innovation, indigenous investment and improved infrastructure and skills in our regions. And to complement the locally based venture capital funds that we are forming in every region of the country, we are today publishing our prospectus for a new £50 million fund to help small firms in every region to access the risk capital that they need—capital that is often not available from the banks.
	New investment, new businesses and new jobs are also the key to regenerating high-unemployment communities in our country. A new community investment tax credit, on which I am publishing details today, will match every £100 million of private investment with £25 million of additional public investment. And, as a special measure to help the slowest growing and highest unemployment areas of Britain, we will, in 2000 wards in constituencies throughout the country and for all property transactions for homes and business properties worth up to £150,000, abolish stamp duty from Friday. And in the Budget, I propose to legislate to take more business property transactions in these areas out of stamp duty.
	The Government will do all they can to fight unemployment in normal times and in times like these. And I can report that Britain's unemployment rate is this year the lowest since the 1970s. For the first time in a century, unemployment in Britain is lower than in Japan, and lower than in America. Compared with Britain, the unemployment rate in the euro area is 50 per cent. higher—the equivalent of 1 million more British people in work.
	Because we will not retreat from our commitment to full employment, my right hon. Friend the Secretary of State for Work and Pensions will tomorrow announce in this House new measures to help the newly redundant and to expand the new deal to help the long-term unemployed back to work.
	And because a third of the existing work force lacks basic or level 2 qualifications, and because the old voluntaristic approach has not worked, we have been investigating the joint Trades Union Congress and Confederation of British Industry proposals for a tax credit for in-work training. Following today's report from the performance and innovation unit we will, from September next year, pilot a new approach combining direct financial support for business—especially small business—with time off for training, under which employers, employees and Government each accept their responsibilities.
	Because the skills of the future start in the schools of today, my right hon. Friend the Secretary of State for Education and Skills will be announcing further projects funded from the capital modernisation fund, as we meet our commitment to raise the share of national income spent on education.
	This is also a testing time for our fiscal regime, so I now turn to the public finances. While in past downturns interest rates have come down too little, too late or, because of high inflation, not at all, so, too, excessive levels of debt or deficit can make it difficult for fiscal policy to play its proper role.
	When we came to power, debt was too high and debt interest payments ran at 3½ per cent. of national income. So we maintained spending limits, took the necessary tax decisions and cut debt. We also set tough fiscal rules for the long term—rules not just for a year or two but across the economic cycle: rules that demand a tighter approach in the best of times and allow the automatic stabilisers to work fully at a time like this, in both cases fiscal policy supporting monetary policy. And because from 1997 we tightened fiscal policy by 4 per cent. of national income, we have been able to reduce net debt, not just in one year but across the economic cycle.
	I said in the Budget in March that we would repay £34 billion of the national debt this year. In fact, by cautious budgeting, we were able to repay in the last year not £34 billion, but a total of £37 billion of debt. In total, since we came to power, we have now repaid £51 billion of the national debt.
	In 1996–97, debt was 44 per cent. of our national income. Two years ago we brought it down to 36 per cent. This year it has been brought down to 31 per cent. That is in contrast to nearly 40 per cent. in America, 40 per cent. in Germany, over 40 per cent. in France, over 50 per cent. in the euro area and in Japan, and 95 per cent. in Italy. Britain's debt is now the lowest share of national income of all these G7 countries, and the lowest of all our major European competitors.
	We had a choice last year: we could use the mobile phone proceeds from the spectrum auction for current spending. In fact, by using the £22 billion for reducing our debt burden, we achieved a permanent saving of £1 billion a year in debt interest payments—£1 billion that is available, not on a one-off basis, but each year and every year.
	Let me give the House the full figures. Debt interest payments were running at £29 billion a year when we came into power, and that was more paid out in debt interest than all the money spent on all our schools in the country. I can report that debt interest, which fell to £26 billion last year, will fall again to £22 billion this year, and we expect it to fall again next year to £21 billion, just 2 per cent of our national income.
	Just as, last year, we paid off more debt in one year than previous Governments paid off in all of the previous half century, so this year debt interest payments will consume less of our national income than at any time in a century—since the time of the first world war.
	The Government's determination to keep a steady hand on the public finances and the economy is for a purpose. With debt and debt interest payments down, it has been possible, even as corporate and other revenues have declined, to maintain our three-year spending plans for health, schools and public services, respond to the emergencies that have arisen, and now borrow at the right time for the economy to make essential investments in the national interest, while still meeting the fiscal rules that we have set over the economic cycle, even on cautious assumptions and even on our cautious case. Our cautious assumptions include deliberately cautious forecasts for equity prices, oil prices, interest rates and economic growth. And I can report to the House that even while we project significantly lower tax revenues this year and next, we are still well within our first rule this year and every year—the golden rule that we balance the current budget over the economic cycle.
	The current budget is projected this year to be in surplus by £10 billion and in future years by £3 billion, £4 billion, £7 billion and £8 billion. Net public borrowing is projected to be £2½ billion and in future years, £12 billion, £15 billion, £13 billion and £13 billion. We are also well within our sustainable investment rule: that debt be at or below 40 per cent. of national income, with debt projected to be 31 per cent. in every one of the next five years.
	Taken together, the monetary and fiscal figures I am publishing today show we are also well within the Maastricht criteria. Consistent with our policy on the euro, we are undertaking the preliminary and technical work necessary to allow our assessment of the five economic tests.
	Let me turn now to decisions on spending that have resulted from the terrible events of 11 September. I can report that for new equipment and immediate operational requirements an additional £100 million has been made available to the Ministry of Defence. To cut off the supply of finance to terrorists and to fund other anti-terrorism measures, we have set aside extra resources of £20 million for this year alone.
	To fund the need for additional policing since 11 September, a further £30 million has been made available to the Met and to other police forces. To fund humanitarian assistance to Afghanistan, and elsewhere, and to meet the new international development obligations since 11 September, Britain is contributing an extra £100 million.
	In addition to the extra responsibilities we have assumed since 11 September, we now expect tackling food and mouth disease and supporting the recovery of rural areas to cost £2.7 billion.
	In this pre-Budget report we are also preparing for the Budget and for the coming spending round. As the Prime Minister has said, meeting our international development responsibilities is not an option but a duty. Out of the tragedy of 11 September a new sense of our obligations to each other across the world has been born, and a recognition that if globalisation is to work for all the people of the world, including the poor, then—as the Secretary of State for International Development has been urging—a new deal for prosperity must be forged between the richest developed countries and the poorest developing countries.
	The UK Government will therefore propose to the financing for development conference of the United Nations that to meet the world's agreed 2015 development goals—every child in primary schooling, a two thirds reduction in child mortality, a halving of world poverty—the international community should now establish a new international fund leveraged up to $50 billion a year to help achieve for the developing countries after 2001 what was achieved for Europe with the Marshall plan after 1945.
	I can confirm that in the next spending round we will not only raise significantly the amounts of our own overseas development aid but also raise its share in national income, a measure for which I hope there will be broad all-party support across this House.
	This challenge of giving must of course be met by the Government on behalf of the people, but people too, encouraged by Government, should be empowered to give more themselves. For the first time, gift aid is providing a 28 per cent. addition to every donation by taxpayers to recognised charities and thus is now being widely used. Special end-of-year appeals to contribute foreign coins to charities can also receive the 28 per cent. addition. I have also asked the Inland Revenue to consult charities on an innovation that could take gift aid to a new level and allow taxpayers to donate directly to their designated charities on the annual tax form and so gain further tax relief for doing so.
	The cause of the environment also reminds us of how closely our lives are bound up with what happens in the world. In the 21st century, as we now know, the global environment is the local environment. To stem the tide of global warming the Deputy Prime Minister is leading the pressure for new international agreements, and because these issues are also central to our Budget and spending review, we are consulting from today on a total of 10 new environmental measures. They include additional tax relief for businesses investing in environmentally friendly technologies, and new tax incentives to encourage the fuels and the vehicles of the future—all the measures reflecting Britain's commitment to energy efficiency, innovation and conservation and to playing our part in safeguarding the environment.
	We are investing £180 billion over the next 10 years in transport; and so that foreign lorries pay some of the environmental and other costs of using British roads, we are also publishing today our consultation document on introducing a charging system under which non-British companies and lorries pay their fair share.
	I turn to the pre-Budget consultation on measures for families and for pensioners. The old welfare state that we inherited paid out benefits, too often without regard to individual circumstances or personal responsibility. Today, the working families tax credit is making work pay for nearly 1.3 million families—400,000 more than on family credit; 150,000 families are getting help with child care. Since 1997, lone parent employment in this country has risen by 20 per cent. and today 200,000 more lone parents in work are receiving the working families tax credit. Building on this, we will later this week introduce legislation for the next step: extending the principle of the working families tax credit to make work pay for those without children as well.
	The children's tax credit, the first recognition of children in the tax system in a generation, provides up to £520 extra a year for 5 million families in this country. Later this week, we will publish the new legislation for that next step: on top of universal child benefit, we will integrate in one seamless payment all income-related support for children, as we advance towards our goal of abolishing child poverty.
	For the first time, all support for children will now be paid to the main carer—usually the mother, and that is the best way to strengthen families. I shall return to the subject of children in the Budget next spring, when I hope to have a little more first-hand knowledge to talk about these matters.
	So our approach in modernising welfare is to seek not narrowly targeted benefits just for those at the bottom, but the right help at the right time for work, for children and for hard-working families, with over 5 million—85 per cent.—now eligible for the children's tax credit or the working families tax credit.
	For the first time, through tax credits, the tax system is paying money to families rather than taking it, with tax rates now ranging from 40 per cent. at the top to as low as minus 200 per cent. for low paid families; tax credits, therefore, are modernising the welfare state, encouraging work and helping families without stigmatising them.
	Today the Secretary of State for Work and Pensions and I are announcing new measures that will apply the same approach to pensions—more help for every pensioner in Britain, most help going to those who need it most. Next March, the pension will rise, as we have already announced, by £3 a week for individual pensioners and £4.80 for couples. But the long-term guarantees that we are proposing today not only tackle the poverty faced by the poorest, weakest and frailest, but reward, rather than penalise, the modest savings and occupational pensions of the majority. And they are backed up by a tax policy that is fair to those who have provided well for their retirement.
	Upon the foundation of the basic state pension, we have already announced our first guarantee—no pensioner will have an income below £98 a week in April 2002, or £100 a week in April 2003, and no couple will receive less than £154 a week—at least £1,000 more a year than in 1997, a 24 per cent. real-terms increase in the minimum income guarantee.
	Pensioner poverty is a reproach to us all. And the minimum income guarantee, which is already benefiting 1.8 million households, will rise in line with earnings for the whole of the Parliament.
	Today we are also setting aside new funds, £2 billion in total, to provide a second guarantee from 2003. For all pensioners in communities around this country whose hard work has secured a small occupational pension or modest savings but who have, in the past, been penalised for their thrift and savings, I can confirm that any pensioner with income in retirement below £135 a week—and any pensioner couple with income below £200 a week—will see their hard-earned savings and occupational pensions rewarded with extra money, not penalised, as they were in the past, by losing the chance of benefits.
	For a single pensioner on the basic state pension, with £1,000 a year in occupational pension, the pension credit will mean an extra £600 a year. For a pensioner couple with the basic state pension and occupational pension of £1,500 a year, the pension credit will mean an extra £900 a year. Together, the minimum income guarantee and the pension credit will be available to half of all pensioner households, 5.4 million pensioners in total. The Secretary of State for Work and Pensions will set out the full details tomorrow.
	For those pensioners who pay tax, we offer a third guarantee: when the new system is introduced in 2003, we will raise the pensioner's tax allowance at least in line with earnings for the rest of this Parliament. For all Britain's 11 million pensioners, I can also announce a fourth guarantee: that the Secretary of State for Work and Pensions and I have decided that the basic state pension will always rise by at least £100 a year for single pensioners and by £160 for couples. In future, the state pension will rise by at least 2.5 per cent., or more if inflation is higher—at least £100 more each year on the basic pension.
	I can also confirm that we have set aside sufficient money so that the winter fuel allowance will be paid at £200 pounds for each year of this Parliament.
	So these are our guarantees: for every pensioner an increase of at least £100 a year every year in the basic state pension; and for 5.4 million pensioners starting on the pension credit in 2003 up to an additional £1,000 per household; free TV licences for all pensioners over 75; for the poorest pensioners a minimum income guarantee of £100 a week; and for every pensioner household a £200 winter fuel allowance each and every year of this Parliament; every pensioner in Britain better off; meeting our obligations to those who in peace and war have worked for, fought for and served and built our country all their working lives.
	I turn now to the long-term funding of the national health service and the decisions that we have to make for the 2002 spending review. Building the 20th-century health service was among the greatest achievements of an earlier generation. Renewing that health service for the 21st century is among the great challenges for our generation.
	For decades NHS funding was decided on a year- to-year basis with no certainty for professionals or for patients. Having put the public finances in order and released extra resources in 1997, 1998 and 1999, the 2000 spending review provided an average real-terms increase of around 6 per cent. a year for the NHS to 2004—significantly above the historic average of 3.3 per cent.
	Because we knew that money has to be matched with modernisation, the 10-year NHS plan is also implementing significant reforms: devolving 75 per cent. of the NHS budget to primary care trusts; setting national service frameworks for the main diseases and conditions; reforming contracts for family doctors, consultants and nurses; and changing working practices with greater diversity of choice and provision.
	Within the framework of the 10-year plan, reporting to the Prime Minister and the Secretary of State for Health, further work is being done on management, accountability and incentives in a reformed NHS.
	Today we can further support health service reform. Because of the prudence, debt is lower and debt interest payments are lower. And I am able to announce that, even in these testing times, while meeting all our fiscal rules, we are releasing for next year an extra £1 billion for the NHS. UK health spending in the coming year will now rise by £6 billion—by 9.6 per cent. in cash terms, 7 per cent in real terms. The Secretary of State for Health and his Scottish, Welsh and Northern Ireland counterparts will announce how this extra money will be spent.
	But our resolve is to tackle the immediate, medium- term and long-term needs of the health service. The pressures on the NHS, the vital place it has in the fabric of Britain and the critical role it plays for the British people mean that we must plan not just one to three years ahead, but five years, 10 years and even 20 years ahead. So in the Budget in March 2000, 18 months ago, I said that to prepare for the next spending round an independent review should examine long-term NHS funding needs, over the next 20 years.
	In the half century of the health service, no such review has ever been carried out. Taking the long-term view means honestly facing the scale of the challenges ahead.
	The review is being conducted by Mr. Derek Wanless, formerly of NatWest. Today he is publishing his interim report. It is a 220-page detailed examination of future trends in health care and future funding issues on which he will consult widely. But the first question he said that he had to ask is whether a publicly funded tax-based health service could itself be a significant pressure on costs and whether a tax-funded health service remained the best way forward.
	So he has looked at other European and international methods of funding and finds that all health systems are facing rising pressures. In systems which rely on private medical insurance, he concludes that compared to the NHS, there is less cost control, more uneven coverage, and many left out. And in systems which rely predominantly on social insurance, he has found excessive administrative overheads, insufficient incentives for cost control and, for example in France, large costs for employers and for employees who pay charges for every GP and hospital visit even after their social insurance premiums.
	Mr. Wanless's interim report states:
	"my conclusion is that there is no evidence that any alternative financing method to the UK's would deliver a given quality of healthcare at a lower cost to the economy. Indeed other systems seem likely to prove more costly. Nor do alternative balances of funding appear to offer scope to increase equity".
	So having examined whether a publicly funded NHS is itself a pressure on costs and thus whether it is sustainable, Mr. Wanless's view is that the principle of an NHS publicly funded through taxation, available on the basis of clinical need and not on ability to pay, remains both the fairest and most efficient system for this country.
	Mr. Wanless has also examined in detail the cost pressures facing the service for the future. He concludes that there will be significant pressure both from technological innovation and from rising public expectations, but less pressure than is commonly thought from an ageing population. He highlights the potential long-term gains, building on the reforms of the NHS plan, from a better use of work-force time and of resources generally, including the gains to be had from investment in information technology.
	Mr. Wanless emphasises in particular a problem that goes back over decades to the foundation of the NHS—a history of under-investment over 50 years and a long-term lack of capacity. And comparing Britain to other European countries, such as France and Germany, his figures show a decisive difference in the area of finance, despite some significant closing of the gap in the past couple of years: that these countries have, over decades, committed significantly more public resources as a share of national income to health care.
	The Wanless report highlights the difference it will make for patients if the NHS is put on a sustainable long-term footing and if we secure the best use of resources. Building on the 100 new hospitals, the 10,000 new doctors, the booked appointments of the 10-year plan, more new beds in single rooms, swift access to the best drugs and treatment, and greater patient choice, the goal is a world-class health service that meets the needs of all people in Britain and puts patients first.
	Mr. Wanless will publish his final conclusions next year in time to inform the 2002 spending review, and he will consult in the next few months experts, patient groups, all interested members of the public and the doctors, nurses and all staff who work so hard and give so much of themselves to the NHS every day.
	The spending review will be the time for final decisions. What can be done will depend on the economy and the public finances. Indeed, over the past four years, through savings on debt interest, reallocating resources and economic growth, we have been able to do more for the NHS. I believe that as we plan to make our Budget and spending decisions next year and to fulfil all our commitments to economic prosperity and to social justice, it will be right to devote a significantly higher share of national income to the national health service.
	The decisions we will be making will be for a decade and more. And the way we make these decisions—whether we can forge a new consensus across parties and across Britain—will determine not only the long-term future of the NHS, but the character of our country. I believe that out of this debate an enduring national consensus can be built around the two central conclusions at the heart of this report: that a publicly funded national health service is best for Britain and that a modernised national health service will need significantly greater capacity and significantly more long-term investment.
	Economic stability is the foundation. A steady and prudent approach to the public finances follows. I believe that we will have the strength to take the right decisions and to build a stronger, fairer Britain, and I commend this statement to the House.

Michael Howard: I begin by drawing attention to my declaration in the Register of Members' Interests, and by expressing my gratitude to the Chancellor for giving me sight of his statement fully 10 minutes before he got up to speak. Some of the pages, which were completely blank, were especially interesting.
	I congratulate the Chancellor on his statement. He delivered it with great force and he was, as ever, almost completely in command of his material. We welcome many of his announcements. I am sure that these warm words will come as no surprise to him. Praise from his political enemies is nothing new to him. After all, only last week, the Prime Minister let it be known that the Chancellor was probably the best Chancellor in the world. To the Prime Minister, he is the Carlsberg Chancellor. True to form, the Chancellor returned the compliment, saying that the Prime Minister was the best friend that he had had in politics. The Prime Minister knows that with this Chancellor one has to read the small print: the Chancellor used the past tense. It seems to me that his phrase had something of "Goodnight" about it.
	The Chancellor laid great emphasis in his statement on what he called the fundamental strength of the United Kingdom economy, and to the extent that it is true, of course we all welcome it. Does he not agree, however, that there were serious concerns about the UK economy before the tragic events of 11 September? Those include concerns about the current account deficit, with Britain spending more than we earn. According to the Chancellor's forecasts today, that deficit is expected to continue, and indeed to grow. There are concerns about the long-term sustainability of spending plans that outstrip the rate at which the economy is growing. There are also concerns about the impact of new taxes and red tape on the ability of British business to win orders and create jobs.
	The Chancellor referred to the need to improve Britain's public services, but we have heard all this before. Year after year, we have had promises from this Government. In 1997, they said that there were 24 hours to save the national health service. In 1998, the Prime Minister said,
	"we are delivering on our promises".
	In 1999, the Chancellor said that the year would be
	"New Labour's year of delivery".
	Last year, Government advisers said that it would be the year
	"when things really started to happen".
	Six months ago, the Government said that they would put schools and hospitals first. Now, 2002 is almost upon us and the Chancellor is trying the same trick again. Every year they make these promises, and every year they break them.
	Despite all the promises, all the tax increases and all the hype and hyperbole, services such as health, education and transport have got worse over the past four years. Did the Chancellor read the recent front-page editorial in The Mirror on the state of the NHS? It said:
	"Things haven't got better"
	under Labour,
	"they've got considerably worse. The Mirror's had enough of phoney pledges and promises on the NHS. Labour has been in charge for nearly five years. They can't hide behind the handy 'Tory policies' excuse any longer. It is now Labour's health services policies that are failing. And failing badly."
	If the Government and the Chancellor can no longer convince The Mirror with their phoney pledges, such as those in today's statement, who on earth do they think that they can convince? They certainly cannot convince the chairman of their own party, the Minister without Portfolio, the right hon. Member for Norwich, South (Mr. Clarke). [Hon. Members: "Where is he?] Indeed. He is certainly not one of the Chancellor's best friends, but he confessed at the weekend that the health service had indeed got worse under Labour. I hope that there will be no more argument about that.
	Does the Chancellor agree that morale in all the caring professions and the public sector as a whole is now worse than ever? The chairman of the British Medical Association said,
	"our morale has been driven to distressingly new depths".
	The new head of Ofsted has warned that schools are facing the worst ever shortage of teachers. The chairman of the Police Federation described police morale as being at an all-time low. The Chancellor must explain why, this year, he is now only managing to spend half the increase in Government investment that he was planning to spend just six months ago.
	The Chancellor made great play of the Wanless report which, of course, we shall study carefully. However, he must have forgotten the terms of reference that he set Lord Wanless—I am sorry, I mean Mr. Wanless—which asked him to consider a health service that was exclusively publicly funded. It should not surprise anyone that Mr. Wanless came up with the answer that the Chancellor wanted him to find; that a publicly funded service would be better. If you ask a Labour question, you get a Labour answer.
	Twelve days ago, the Chancellor said that the
	"central economic theme of our Pre-Budget Report will be our support for enterprise".
	We have heard all that before. Year after year, we have had promises from the Chancellor. In his 1997 Budget, he said:
	"This Government will support the small businesses of Britain."—[Official Report, 2 July 1997; Vol. 297, c. 307.]
	In 1998, he said that his measures would reward
	"enterprise and entrepreneurship throughout the whole economy."—[Official Report, 17 March 1998; Vol. 308, c. 1097.]
	Two years ago, he said that his Budget would encourage
	"a dynamic Britain of enterprise and fairness".—-[Official Report, 9 March 1999; Vol. 327, c. 173.]
	Last year, he again promised to "reward enterprise and entrepreneurship" and earlier this year, he said that his Budget would "boost enterprise".
	What is the result of all that so-called support for enterprise and business? As a result of the Chancellor's Budgets, the director general of the Confederation of British Industry now says:
	"The reputation of the UK as a low tax economy where overseas investors . . . want to invest is under serious threat".
	As a result of the Chancellor's Budgets, the British Chambers of Commerce now says:
	"The bottom line is that the sheer quantity of red tape on business is damaging our economy, stifling enterprise, job creation and economic growth."
	Every year the Chancellor makes promises, and every year he breaks them.
	Of course, we welcome any measures to help business, and we will look carefully at the details of what the Chancellor has announced today. However, under his stewardship of the economy, Britain has fallen from ninth to l9th in the world competitiveness league. Is that not the real impediment to new job creation? Is it not the case that 3,865 new regulations were introduced last year alone, the highest figure on record? Why did a survey of 4,000 firms across Europe just last week say that companies run into more problems trading with the UK than anywhere else? Is not that alone a damning indictment of the Government's record? Is it any wonder that the last quarter saw the sharpest fall in manufacturing investment since the 1970s?
	Is it any wonder that the burden on business is growing, when the Secretary of State for Trade and Industry says that her Department suffers from lack of focus, confusion for the customer, too many schemes, and inadequate leadership within the Department and by the Department across Whitehall? What a kick in the face for the Secretary of State for Transport, Local Government and the Regions, the Secretary of State for Environment, Food and Rural Affairs and the right hon. Member for Hartlepool (Mr. Mandelson), all of whom held the post of Secretary of State for Trade and Industry in the last Parliament.
	Nothing that the Chancellor has said today goes anywhere near addressing the £10 billion a year burden of extra taxes and red tape that he has imposed on business. What about the benchmarks of success that he set up? He is always making promises about productivity. Year after year, we have had promises from him. In his first pre-Budget report four years ago, he said:
	"The first challenge is to increase our productivity."—[Official Report, 25 November 1997; Vol. 301, c. 773.]
	In his second report a year later, he said that productivity was
	"a fundamental yardstick of economic performance",
	and that he would
	"set in place measures to improve productivity"—[Official Report, 3 November 1998; Vol. 318, c. 681.]
	Two years ago the right hon. Gentleman said:
	"Britain can now aspire to a new economic ambition for the next decade: a faster rise in productivity than our main competitors"—[Official Report, 9 November 1999; Vol. 337, c. 883.]
	Last year he said that Britain had
	"the opportunity to achieve high levels of productivity growth"—[Official Report, 8 November 2000; Vol. 356, c. 315.]
	All the while, as the Chancellor has been making such statements, Britain's productivity growth has been falling. It has fallen from 2.2 per cent. in the last four years of the Conservative Government to 1.5 per cent. in the first four years of the Labour Government. Under the Conservatives, we had productivity growth above the G7 and Organisation for Economic Co-operation and Development average; under Labour, it has been below the G7 and OECD average. On productivity as well, every year the Chancellor makes promises and every year he breaks them.
	Let us look at the growth figures—the Chancellor was rather proud of those. He pointed to UK growth in comparison with the rest of the G7. I very much hope that we will grow more quickly than our competitors, but if that is to be the Chancellor's new indicator of success, he cannot take one year alone. Why has he not mentioned the fact that in the first four years of the Labour Government, the United Kingdom economy grew at a slower rate than that of our competitors, slower than that of the G7, slower than that of the OECD, and slower than the United Kingdom economy itself in the last four years of the Conservative Government?
	One of the many problems that the Chancellor faces is the extent to which he has to clear up the mess that he has made. He suggested that he would improve capital gains tax, but who introduced the current complicated structure in the first place? It was the Chancellor himself. He says that payroll services for small firms are to be made more effective and less costly. We all welcome that, but who introduced the additional burdens on small business payrolls in the first place? It was the Chancellor himself, asking them to administer schemes such as the working families tax credit and stakeholder pensions.
	Of course, some of the other measures that the Chancellor outlined today are welcome. We welcome the extra spending for the armed forces and the security services, and the measures that he proposed to help alleviate world poverty. He gave more details of his pension credit, but he did not say much about the employment credit and the integrated child credit. I hope that he will tell us in his reply how much those will cost and how he proposes to pay for them. I hope that the right hon. Gentleman will spell out clearly how he intends to pay for Government spending after 2003–04. After his prevarication during the general election campaign, will he now tell us whether he intends to increase national insurance contributions?
	We welcome the increase announced today in the retirement pension and the winter fuel payment, but what about tomorrow's pensioners, cruelly hit by the Chancellor's pensions tax? When he first introduced it in July 1997, he tried to justify it by saying that pension funds were in surplus and companies were enjoying pension holidays. He has helped to destroy the surpluses and put an end to the holidays. How does he now justify his savage attack on pensions?
	Last week we challenged the Chancellor to deliver a pre-Budget report with a difference. We said that it was time to acknowledge the serious causes of concern about the UK economy, and the burdens that he has imposed on British business. We said that it was time for the Government to act on the state of crisis in our public services. He has failed those challenges.
	The burdens on business remain. Public services will continue to get worse, to the growing distress of patients, passengers and parents. It is not only patients on the waiting list; it is not only passengers and parents on the waiting list; the whole nation is now on the waiting list—waiting in vain for the Government to deliver on their promises.

Gordon Brown: I shall answer in detail every point that the right hon. and learned Gentleman makes, but the country will find it difficult to take lectures from the shadow Chancellor, who quotes his Government's economic record, but was Secretary of State for Employment during the last world downturn, when we had 15 per cent. interest rates, 10 per cent. inflation, a £50 billion borrowing deficit, then 22 tax rises and cuts in public expenditure.
	The right hon. and learned Gentleman speaks about regulation. He said that the minimum wage would cost 1 million jobs. We have 1 million more jobs as a result of what we have done. He opposed Bank of England independence and he was wrong. He has said in the past few weeks that we are the worst economy of any when it comes to facing up to the future, and we have the highest growth in the OECD this year—so he is wrong again. Of course, he was the architect of the poll tax, and he was wrong on that as well.
	When it comes to the national health service— Mr. Wanless was mentioned—I listened very carefully to what the shadow Chancellor said. He did not welcome the £1 billion that we are putting into the national health service. He did not say that he would join a consensus that the NHS would remain a publicly funded service, that he would support increased investment in the NHS in future years or that he would support a rising share of national income going from public expenditure to the national health service. I sense in the comments made by the Leader of the Opposition and the right hon. and learned Gentleman in the past few months that what was an all-party consensus over the past 50 years that the national health service should be publicly funded and based on the ability to pay is now a consensus that is being abandoned by the Conservative Opposition. Why is that the case? The shadow Chancellor made it his business to start this job by saying that public spending is more than we can afford this year, next year and the year after. That means that he wants to cut public spending.
	In a speech made in 1997 about policy for the next Parliament, the shadow Chancellor said that he wanted spending growth at only 1 per cent. a year. He said:
	"I believe our aim should now be to reduce the proportion of national output taken by the state towards 35 per cent . . . I believe that 35 per cent. is a realistic and attainable long-term goal."
	That is £50 billion of public spending cuts. He must now tell us which schools and hospitals and how many nurses and doctors will be cut. If the Conservative party is to start this period of opposition by saying that we are spending more than we can afford this year, it has a duty to spell out where the cuts will be made. The Opposition have moved over the past few months from being right, to being far right, to being outright wrong on the issues of public spending.
	I shall now turn to each of the points raised by the shadow Chancellor. First, on international competitiveness, as he knows perfectly well, in recent studies by Arthur Andersen and The Economist intelligence unit, we are first and fourth on attractiveness to business. He knows also that when he left power, we were behind France and Italy, the sixth largest economy in the world, and we are now ahead of them, and the fourth largest economy in the world. On the questions on burdens on business, the biggest burden named in the reports is the minimum wage. He must face up to this question: does he now admit that he was wrong on the minimum wage, or is he still prepared to say that, at the next election, the Conservative party will abolish it?
	On growth, he knows perfectly well that our growth level in the G7 is the highest this year. It is also the case that, while manufacturing has fallen by 5 per cent. across the major economies, it has, unfortunately, fallen by 2 per cent. in Britain. The difference between him and us is that we are putting money into permanent capital allowances, a research and development tax credit, regional development agencies, a regional venture capital fund and manufacturing apprentices, and it is all public spending—this includes spending on education—that he would not make. Again, if he is going to tell us that we should be doing more, he must spell out which cuts he would make in public spending to get to his 35 per cent. target and which additional expenditures he is prepared to make on other areas.
	When the Leader of the Opposition took over, he said that he wanted a fresh approach, new faces, a new beginning and a new start. Instead, we got the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). The torch passed to the last generation.
	The Conservative party has shown, by failing to support the basic principles of the national health service and the additional expenditure on it, that it is not fit for government. Even its fitness for opposition is being challenged. It was in government for 18 years; the way it is going, it will be out of government for 18 years.

Matthew Taylor: On the economy, this was a complacent statement from an extraordinarily complacent Chancellor. On the NHS, the right hon. Gentleman made an admission of failure. On pensions, he announced the biggest extension of means testing in history. After nearly 500,000 job losses in manufacturing since 1997, falling investment and a runaway trade deficit, will not the Chancellor's tax fiddling simply add more to the crippling burden of red tape and bureaucracy on industry and do nothing to tackle the overvalued pound?
	The right hon. Gentleman is confronted with record waiting lists. Only a day after the chairman of the Labour party admitted that parts of the NHS have got worse under Labour, does the Chancellor understand that the implication of the Wanless report is that the Liberal Democrats were right and that the only way in which to tackle the problems of the health service is to accept that, in the long run, the tax burden must increase? Perhaps the Prime Minister has not yet persuaded him.
	Another 40,000 pensioners are likely to die through fuel poverty this winter. Does the Chancellor understand that means-testing half of all pensioners is likely to mean that many do not receive the benefits that he announced? Currently, 500,000 the poorest pensioners do not get through the humiliating means tests that they are forced to take for the minimum income guarantee. Why will the new means test for half of all pensioners work when the old means test for the minimum income guarantee continues to fail to deliver to those who need it most?
	Does the Chancellor remember that in 1993 he said that the next Labour Government would
	"achieve . . . the end of the means test for our elderly people"?
	Instead, so many who have never before faced a means test will be subject to one. Does he remember attacking the Conservative Government in 1996 when he said:
	"Manufacturing output is actually falling . . . manufacturing investment is 4.5 per cent. lower . . . And business investment is recovering more slowly in this recovery than in any this century"?
	Yet, today, manufacturing output is falling. Investment is 15 per cent. lower and business investment is decreasing. Judged on his own words, the Chancellor's statement on the economy is an admission of failure.
	In 1997, does the Chancellor remember masterminding a manifesto that promised:
	"We will rebuild the NHS"?
	Yesterday, the chairman of the Labour party admitted that many parts of the NHS are getting worse.
	The Wanless report proves that we were right to say that we cannot buy enough doctors and nurses to turn round the NHS without raising the tax to pay for that. Will the Chancellor give one simple, straight answer? At 6 pm, he intends to publish the national insurance rates. Will they increase today?

Gordon Brown: No to the right hon. Gentleman's last question. I am grateful to the Liberal Democrat shadow Chancellor. The House of Commons is in the unique position of having two shadow Chancellors: one sits in Folkestone and the other in Truro. It is rather like the mediaeval papacy: two hon. Members claim to hold the position of shadow Chancellor. I shall organise a play-off during the year.
	The hon. Member for Truro and St. Austell (Matthew Taylor) asked three main questions on the economy, pensions and the NHS. On the economy, he knows, despite his comments, that the economy is growing by 2¼ per cent. this year. That is the highest growth among the G7 countries. He also knows through the forecasts that I have given him that we are cautiously optimistic about what should happen next year.
	Of course, it is difficult for manufacturing. Last year, it grew by 2 per cent. and its productivity increased even more despite the weakness of the euro. This year, because of what is happening around the world, it is difficult for manufacturing exporters. I hope that the hon. Gentleman will support our additional measures on research and development, regional development agencies and the new venture capital funds in the regions. I hope that he will support measures that are designed to increase investment and thus long-term productivity.
	On the question of the national health service, I remember the 1997 election, when the Liberals said that we should be spending £500 million a year more on the health service. We ended up spending £5 billion a year more on it. I saw the Liberal manifesto at the last election; I think that it proposed £300 million for the health service for the first year. I have just announced £1 billion for the national health service.
	If the Liberal party wishes, as I think it should, to join this new consensus on the national health service—which, unfortunately, those on the Conservative Benches refuse to join because of their dogma—we can win such a new consensus throughout the country on the idea that a significantly higher proportion of public funds should go into funding the health service over the longer term. We have funded the health service to 2004. The debate should now begin as to what happens after that. I hope that the Liberal party will join that debate and be on our side.
	On the question about pensions, it is a bit rich for the spokesman for the Liberal party to claim that all his policies have been stolen by the Labour party, because the one that he is now criticising was in the Liberal manifesto in 1997. The move towards the integration of tax and benefits, for dealing with the problems of pensions, was proposed by the Liberals in 1997. I believe that that move is right for the country.
	It is wrong that pensioners should be penalised because of their savings. It is wrong that they should get no advantage, and even lose benefits, if they have occupational pensions. It is also wrong—if we are to devise a pension system for the next 20 to 50 years—when many people like me and the hon. Gentleman are going to retire on generous pensions and will be in a position to do without either a pension credit or a substantial rise in the basic pension based on earnings. Sooner or later, we will have to face up to this question. If we are going to do more for those people who deserve to have more done for them by rewarding the pensioner who has an occupational pension and savings, the pension credit is the right way forward. Instead of complaining about means testing, the hon. Gentleman should be saying that a benefit that people claim the minute they retire, then once every five years, and in which the integration of tax and benefits is proceeding apace, is the right way forward for pensions.
	I hope that the hon. Gentleman will also welcome the fact that we have underpinned the pension credit by saying today that the basic pension will rise—no matter what the rate of inflation is—by at least £100 a year every year in this Parliament, as long as the Labour party is in power. In my view, that is the right policy for pensions and pensioners. I hope that, in addition to joining the consensus on the national health service, the Liberal party will support us on pensions as well.

John McFall: I congratulate the Chancellor on his judicious statement today, in the light of world economic events. The comments of the shadow Chancellor were unworthy of a former holder of high office. He made no serious attempt to analyse the situation. The Chancellor has, despite the world economic situation, ensured economic stability in this country.
	If the Chancellor had been at the Select Committee on the Treasury this morning, he would have heard Sir Eddie George and his colleagues on the Monetary Policy Committee say that one of the joys of maintaining the symmetrical inflation target over the past few years has been that we have ensured the lowest unemployment levels for 40 years. Does the Chancellor agree that economic stability and social justice should be the primary aims of the Government, to ensure that we keep up the level of public spending and have the best health service in the next five to 10 years in this country?

Gordon Brown: I thank my hon. Friend, who is the Chairman of the Treasury Committee, which I look forward to visiting in the next few days. He is right about the importance that we attach to maintaining levels of employment. He is also right to say that the levels of unemployment in this country are still the lowest for 25 years, despite the pressures of the world slowdown.
	I should have thought that the shadow Chancellor—whom my hon. Friend mentioned—would want to point out that unemployment in his own constituency has gone down by 61 per cent. since Labour came to power. We have done substantially better than he managed to do when he was Secretary of State for Employment and unemployment was rising.

Michael Howard: It was the ERM.

Gordon Brown: The shadow Chancellor now blames the exchange rate mechanism, as though he was not part of the Conservative Government who took the country into the ERM.

Michael Howard: That was the Labour party.

Gordon Brown: The shadow Chancellor blames the Labour party, but it was the Conservative party—if the history books record it properly—that took this country into the ERM at the wrong rate. No matter how the shadow Chancellor tries to deny the record, 1 million manufacturing jobs were lost and unemployment went up by 1 million in the last world slowdown, when he was Secretary of State for Employment. He is not the answer to the Tories' economic problem; he is the problem.

Kenneth Clarke: I notice that the Chancellor has abandoned poor Prudence and taken up with a Mr. Wanless. May I ask him questions about the future health of the public finances, which are his responsibility and the subject of a Budget? Will he leave the details of national health service policy to other Ministers responsible and accountable to the House who may be able to devote more time to detailed study of it? We do not want the health service run from the Treasury, in my opinion.
	Does the Chancellor accept that debt repayment, for which he continually receives half-hearted cheers from those on the Labour Back Benches, is a result of accident, not prudent design? He has underestimated his revenues; the Departments did not pick up their spending after he ended his freeze; and he had a windfall from the sale of third-generation telephone licences. That has given him debt repayment, but does he accept that the figures can rapidly change in a downturn when, suddenly, all the chances may go in the opposite direction?
	Will the Chancellor confirm that departmental estimates as a whole, not just on health and education, are going up by 7 to 8 per cent. per annum, which is unsustainable, particularly when the economy is beginning to run down? Does he therefore accept that, if he does not stop himself and his colleagues expanding the role of the state at such a rate when the economy is turning down, he will before long squeeze out private investment and private consumption, causing great damage to the British economy and our long-term prospects?

Gordon Brown: Much as I admire many of the former Chancellor's achievements, I do not accept his analysis. First, it was right to cut debt. It was not an accident: it was a deliberate decision. The right hon. and learned Gentleman knows that, when he left the Exchequer, debt was 44 per cent. of GDP, which was too high, and the deficit was nearly £30 billion, which was unsustainable. That is what we had to act on with the difficult decisions that he said he announced, but would never have implemented, to impose tight limits on public spending. That is why we had to take tax decisions at that time and why we also made a deliberate decision to cut debt.
	On the mobile phone sale, Conservative Front Benchers advised us to use the proceeds not to cut debt but for other things. We decided to cut debt, and did so by £22 billion as a result. That was the right decision for Britain. I do not accept the right hon. and learned Gentleman's analysis in that respect. Of course, there are downside and upside risks for the economy next year, and I hope he agrees that I mentioned both in my statement. Nobody is complacent, but I am cautiously optimistic about the prospects for the British economy. I hope that, in the end, he is too.
	On the health service, as a former Chancellor, the right hon. and learned Gentleman knows that funding comes back to the Treasury, so the idea that we should do nothing to plan future funding either from the Treasury or within the decision-making process of Government collectively is wrong. Of course, he made that point to me because he is embarrassed by the policy of Opposition Front Benchers.
	All the time that the right hon. and learned Gentleman was Health Secretary, he defended a health service that was publicly funded, paid for by taxation and available to people based on need. Then he found that the new leader of the Conservative party was saying in the leadership election that he favoured private medical charges and was considering private medical insurance tax relief and the French or German system—anything but the existing system of state-provided, tax-funded health care. The right hon. and learned Gentleman said:
	"It is electoral suicide. Five years before the next election, Duncan Smith is saying he will cut spending and force people to pay for NHS treatment."
	I agree with him.

Alan Howarth: I congratulate my right hon. Friend on being able to give such an impressive account of the economy and its prospects, and I note that the Government have made clear their view that our competitiveness depends on the knowledge, skills and creativity of our people and intelligent collaboration between business and the universities.
	Although I welcome the additional support for business research and development announced today, does my right hon. Friend accept that there is a pressing need to invest more of the resources that he is able to provide in the universities so as to ensure that enough people across a full range of disciplines pursue academic careers and that the universities are thereby able to play their part in sustaining the UK's global economic competitiveness?

Gordon Brown: I am grateful to my right hon. Friend for the work that he did at the Department for Culture, Media and Sport. His long-term interest in universities should be recognised by all Members.
	My right hon. Friend's plea for more funds for universities, and, in particular for their research arm, will have to be considered during the public spending round. As for the commercialising of university inventions, I think my right hon. Friend will agree that the university challenge fund and the enterprise institutes that have been created in every region are a means by which universities can capitalise on their inventions. We want to build on that. I hope that over the next few years more university- based inventors will see their ideas being used in small businesses, and as a result will contribute British products to the economy. My right hon. Friend's spending plea, meanwhile, I take as the first representation to the 2002 spending review.

Peter Tapsell: Does the Chancellor understand that his statement will be seen as an admission that, far from overcoming boom and bust, the British economy is back at the "bust" stage of its trade cycle, and that the ratio between the pre-election boom that we had and the post-election bust that we are experiencing now is wider than it has been for a good many years?

Gordon Brown: Let me point out that it was the Opposition who raised the question of boom and bust. When the hon. Gentleman compares the last world slowdown with this, he will note that when the economy went into recession in 1990 it was impossible to cut interest rates, because inflation was running at 10 per cent. It was also impossible to take the action that was necessary on the fiscal side when it could have been taken.
	The hon. Gentleman should look at the record of the last Conservative Government when he tries to suggest that there is boom and bust under this Government. It is quite the opposite. The policy we are pursuing is one of stability. This year that policy has yielded a growth rate of, we believe, 2¼ per cent., and we are forecasting a rate of 2 to 2½ per cent. next year. That is not boom and bust; that is an economy which is trying to achieve a degree of stability that we have not had during previous world downturns.

Peter Pike: I welcome what my right hon. Friend has announced. I also welcome what the Government are doing for the low-paid and pensioners, and the investment that is being made in hospitals and schools in constituencies such as mine. May I make one plea, however?
	In Burnley we have 4,000 empty houses, and the number is rising day by day. The position is becoming desperate. We need Government help to demolish at least 2,000 of those houses speedily. When we come to the spending review in a few months' time, can we be sure that the Government will respond positively so that the council—together with the Government—can tackle what is a major local problem?

Gordon Brown: Housing was one of the issues raised during the last spending review, and we provided more additional funds. I agree with my hon. Friend that there are real challenges and real problems in terms of ability to repair the housing stock, which result from not just years but decades of neglect.
	I shall put my hon. Friend's representations to the relevant Department—and this, too, is a matter for the spending review.

Michael Spicer: Why has the rate of productivity, which was rising until 1997, been falling since then—and why has a table showing that fact, which appeared in last year's productivity report, been airbrushed out of the current one?

Gordon Brown: The only years in which productivity has been negative were under the Conservative Government. [Hon. Members: "Come on!"] The hon. Gentleman asked about rates of productivity. Is the rate negative, or is it positive? Productivity has been positive under Labour for three years: manufacturing productivity has been positive for two years, and productivity generally for one. It was negative under the Conservatives.
	What is happening to the British economy, I believe, is what, in many ways, happened to the American economy in the early 1990s. There has been a large growth in employment—1¼ million—in the British economy. A large growth in employment took place in America in the early 1990s, which made possible the productivity growth that took place later.
	Our productivity is rising, not falling. Our manufacturing productivity rose substantially last year. It is ridiculous for the hon. Gentleman to say that productivity is falling.

Michael Spicer: Productivity rates.

Gordon Brown: Productivity is growing, and will continue to grow.

Martin O'Neill: I congratulate my right hon. Friend on the decision to announce that the winter fuel allowance will be sustained for the next three winters. However, as he knows what the sums will be, will he reconsider the entitlement cut-off date? It is causing great difficulty for those who discover that, by an accident of birth, they will not receive the £200 winter fuel allowance that they may have been anticipating.
	I also welcome the R and D tax breaks. As my right hon. Friend will be aware, however, in the past couple of years, some manufacturing companies have not been able to invest because of the need to compete with the eurozone. Consequently, they have had to spend money on keeping prices down rather than on investment. Is it not time for tax breaks for run-of-the-mill investment rather than just for research and development? Productivity in many smaller companies would be assisted if they received a proper incentive to invest in increasing their productive capabilities.

Gordon Brown: I am grateful for those questions. The research and development tax credit currently goes to small firms, but it will now be extended in a different form to large firms. We are publishing a consultation document on that in the next few days. My hon. Friend also mentioned general allowances for investment. We have created a better regime for small and medium-sized companies so that capital allowances are permanent rather than temporary, as they were before. Allowance levels are also far more generous than they were before. I hope that that will allow companies to make the right decisions to invest even in a period of world slowdown.
	Equally, we are trying to do more for start-up businesses by providing them with access to capital at a cheaper rate, which is the purpose of regional venture capital funds. There will be a fund in Scotland, a fund in Wales and a fund in Northern Ireland, as well as one in each region of Britain. I believe that the public and private contributions to the funds will make access to them possible for businesses that might otherwise not have that opportunity.
	The winter allowance is available to people at 60 and it is difficult to say that it should be available to people at 59. We are, however, trying to be as fair as possible in implementing the allowance. If my hon. Friend would like to draw our attention to a set of anomalies, we will clearly examine it.

Jonathan Sayeed: I trust that by the time of the next Budget the Chancellor is experiencing the joys of fatherhood and the cost of parenthood under a Labour Government. In every year in which this Labour Government have been in power, the nation has spent more than it has earned. Is that sustainable?

Gordon Brown: That is not the case. We have been paying off debt for the past four years, and we have paid off £51 billion of debt. As for children and families, the hon. Gentleman knows that under this Government child benefit has increased from £11.05 to £15.50, which is a 30 per cent. increase. It is a far larger increase than was ever made under the previous Conservative Government. It is also our contribution to families and to relieving child poverty. The right hon. Gentleman will also know that 5 million families—including many in his own constituency—are now receiving the children's tax credit, which is worth £10 per week more. In other words, in the previous Parliament, child support doubled for 5 million families. That could not happen if the public spending plans supported by the shadow Chancellor were ever pursued.

Kali Mountford: I should have thought that today the whole House would want to congratulate the Chancellor on steering a very steady course in a major world economic slowdown. He announced that manufacturing was growing at 2 per cent. Does he accept that that disguises a slowdown in some sectors and some regions? Is he confident that low interest rates and low inflation, regional development strategies—particularly to address the issue of the north versus the south-east—and the tax measures that he has announced today and previously will be sufficient to assist, for example, the textile sector—which particularly affects my own area—and to ensure that there is growth in all areas?

Gordon Brown: I am grateful to my hon. Friend and I know that she is a major campaigner on behalf of the textile industry in her constituency. At the end of the last Parliament, the Secretary of State for Trade and Industry made provision on that issue, given all the difficulties that redundancies had caused for communities in which textile employment was falling. We can create a more balanced economy between the regions and we can tackle regional inequalities. My hon. Friend's region now has a regional development agency, like every other region, and those agencies are making a substantial contribution to planning a better future for the regions, based more on indigenous investment than ever in the past and on support for innovation and skills. I look forward to seeing the latest plan from the RDA in her region so that we can consider what more we can do there. Unfortunately, the Conservative party would abolish the RDAs.

Alex Salmond: The SNP and Plaid Cymru are delighted to join the Chancellor's consensus on the NHS, but—confidentially—is the Prime Minister with us or is he still hankering after the greatly enhanced private sector role that he was talking about only a few months ago? Has the Chancellor seen the Institute for Fiscal Studies report released this week, which says that total gross public investment has fallen continuously since the mid-1970s and, even allowing for the private finance initiative, the figure for 2000 will be half the 1985 level? Does he accept those figures? How does he reconcile them with his boasts of enhanced public spending in Budget after Budget and autumn statement after autumn statement, and what—if anything—does he intend to do about it?

Gordon Brown: We stood as a party and a Government on a manifesto that said that the NHS should be publicly funded, based on tax revenue, to meet the needs of all people in the country. That is the manifesto on which we stood and that is the manifesto that we are implementing. It is the right manifesto for all parts of the UK. Our support for greater investment in the health service is now shared by the Liberal Democrats, the Scottish National party and Plaid Cymru, but unfortunately it is not shared by the Conservative party which believes that private provision is the way forward. We wish to increase public investment from £7 billion net at the beginning of our term in office to £18 billion, so we wish to double public investment. We have set in place moneys for transport, health, education and the various public services, and the private finance initiative is sponsoring projects worth £12 billion. It is not fair for the hon. Gentleman to say either that public spending is not rising or that it is not the Government's intention to increase public investment, because that is what we are trying to do. Public investment in the economy is rising this year.

Dennis Skinner: Is the Chancellor aware that some of us on the Labour Benches heaved a sigh of relief when he announced that he was not going to do what previous Tory Governments—and some others—have traditionally done in handing out money before an election and then taking it back straight after? This announcement is characterised by the Chancellor deciding, after four years of handing out money, to hand out even more. The people in the coal fields, in particular the miners who retired before 1975 on a paltry occupational pension, will be considerably relieved. Can I ask my right hon. Friend to wave his Harry Potter wand in the direction of pensions for sacked miners, equality of treatment for the canteen workers and speedier payments for chest conditions?

Gordon Brown: I am grateful to my hon. Friend. On pensions, we will announce new commitments on pensions that we were not able to announce in the period before the general election. Those will include commitments for the length of the Parliament on the winter allowance; increases in the basic state pension in line with inflation or the Government's 2½ per cent. target, even if the index of inflation is lower, which will mean £100 a year; and the new pension credit, which will cost £2 billion. I also agree that we have to do more to speed up the money that miners should receive as a result of the lung diseases that they contracted working for this country in the national coal mining industry. We have set aside more than £1 billion for that provision. I understand that 170,000 miners have applied. Because of the nature of the court judgment, they will have to face legal and medical difficulties that must be resolved before the money gets to them. I am as anxious as my hon. Friend that they should get the money as quickly as possible, and we are considering new measures to ensure that. We are also considering mineworkers' pension funds, as my hon. Friend requested.

Nicholas Soames: Despite the Chancellor's near-hysterical rant at my right hon. and learned Friend the shadow Chancellor, I join my right hon. and learned Friend in warmly welcoming much of what the right hon. Gentleman has said. However, what advice would he give my constituents, who remain extremely anxious about a Treasury-run health service? The Treasury must of course have a hand in health service planning, but 21 people in the Princess Royal hospital in Haywards Heath had to spend last night on trolleys in the accident and emergency department. Moreover, 31 beds there are blocked by people who cannot get places in old people's homes. Does the Chancellor understand that, despite the huge sums of additional money that he is pouring into the NHS, PR stunts that imply that the health service is somehow getting better just do not wash in Sussex?

Gordon Brown: Clearly, the hon. Gentleman does not agree with the new policy on private health being propounded by Conservative Front-Bench Members, although I understand what he says about waiting lists at individual hospitals and about accident and emergency departments. We want to do more, but hon. Members of all parties must face up to the fact that a health service that delivers the operations and service that we all want has to be paid for. That means that the amount of money available to the NHS has to be increased, and that is what we are doing. The hon. Gentleman must face up to the fact that Conservative Front-Bench Members do not want to spend that money. That is the dividing line between the parties.

Roger Casale: I welcome my right hon. Friend's statement today. I especially welcome the renewed commitment to investing in our health service, to tackling poverty at home and abroad, and to further incentivising investment in small and medium businesses. However, the outstanding element in the statement was the prediction that forecasts of UK economic growth would remain unchanged, even against a backdrop of world-wide economic recession. Does my right hon. Friend agree that stripping £50 billion out of public spending, as the shadow Chancellor would like, would have a disastrous effect on public services and mean that we would have to revise forecasts of UK economic growth substantially downwards? Does not that show that the Opposition are committed to dogmatic economics, and that they are losing their reputation for economic competence?

Gordon Brown: I am grateful to my hon. Friend for that question, and I agree with him that it is very important that we meet our international responsibilities with respect to overseas aid. I sense that the shadow Chancellor supports our policy of devoting a higher share of national income to overseas aid, and of significantly increasing the overseas aid budget. We are proposing a $50 billion international development fund, to which all the major countries will have to contribute. An element of private finance could be injected into that fund, as well as the public finance that will be contributed. However, if we are to have the sort of reconstruction in the poorest countries and developing areas of the world—and especially in Africa—that came after the second world war, a new bargain will have to be struck. That bargain will mean that, in return for stability, the liberation of those economies from corruption and the opening up of trade, there will have to be a transfer of resources to enable the development of health, education and anti-poverty programmes.
	The problem facing the Conservative party is that, right at the beginning of its period in opposition, it has a shadow Chancellor who is committed to making cuts worth £50 billion in public spending. That is more extreme than the Letwin plan at the general election.

David Laws: Will the Chancellor acknowledge that an important part of the Government's health policy went missing from his statement today? I refer in particular to the announcement made on the Chancellor's behalf by the Prime Minister on the "Breakfast with Frost" television programme on 16 December 2000, when he said that he would bring the average level of spending on the NHS up to the European average by 2005. That commitment seems to be missing from the Chancellor's statement today. Will the Chancellor confirm that that remains the firm commitment of the Government, or is it still a mere aspiration, as the Treasury has wanted?

Gordon Brown: I think that I read out in the previous Budget statement the figures for national health service and general health service spending as a share of national income. I think that the figures went up from 6.4 per cent. to 6.8 per cent., 7 per cent., 7.2 per cent. and 7.4 per cent. I said today that we want to see a significantly rising share of that national income for the national health service.

Peter Mandelson: May I congratulate the Chancellor on his pre-Budget report and the measures that he has announced today, and on his unrivalled stewardship of the economy? As we all seem to agree that the problems affecting all our public services, including the transport system, have their roots in decades of underfunding, does he agree that this historic deficit will take years of consistently high investment to put right within a framework of clear policy and determined management? The public must be prepared, as I believe they will be, to back that investment for years to come and to make the personal financial sacrifices that may be necessary at some stage in the future if we are to get the quality of public services in this country that will match the best of those in Europe.

Gordon Brown: I am grateful to my right hon. Friend. He is absolutely right that there is significant public demand for the investment that we are making in transport, health and education. We are committed to a £180 billion programme of private and public financing for transport. It is a 10-year plan which is moving ahead and will continue to move ahead. As we have seen over the past few weeks, the important thing is that the money is not wasted but goes on improving our rail track and our rail and transport services. Equally, we are committed to significantly higher levels of investment in the health service and education.
	As my right hon. Friend has taken a great interest in the regions, may I add that we are committed to ensuring that our investment secures greater regional economic balance in the country? When he was at the Department of Trade and Industry, his work in improving the country's regional policy and the continuing work of the Secretary of State for Trade and Industry and the Deputy Prime Minister are crucial. The investment will be crucial in bridging the regional gaps in our country.

Michael Jack: The spectre of unemployment is creeping inexorably across the face of north-west England. BAE Systems announced further job losses today, and there have been announcements from Rolls-Royce, Baxi, Cammell-Laird and Marconi. In addition to the welcome measures for small business, will the Chancellor look again at the point made by my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) that business is bearing an additional cost of doing business of anything up to £10 billion? Will the right hon. Gentleman look again between now and the Budget at ways in which some of those costs can be relieved?
	In the light of the Chancellor's previous answer, may I ask him to give a commitment to business in the north-west that there will be investment in the M6 motorway and the west coast main line so that our transport infrastructure can assist at least the north-west to communicate with the rest of the United Kingdom and Europe?

Gordon Brown: On the right hon. Gentleman's first point, any redundancy is to be regretted. The men and women who are losing jobs in these highly sophisticated industries, which face huge world pressures, have my sympathies as well as those of the right hon. Gentleman. It is one of the reasons why tomorrow the Secretary of State for Work and Pensions will announce new measures that will help, including rapid response teams, which will be in place where there are redundancies and people need advice on training to help them get the jobs that are available. A large number of vacancies exist in every region of the country, and we are determined to help people looking for new jobs to get these vacancies as quickly as possible.
	On the right hon. Gentleman's second point about cutting red tape, I have announced today that we mean to go ahead with a small business measure that will make it far easier for businesses to do their VAT and save money at the same time. We are also considering—and we want this to happen—a means by which tax accounts and company accounts can be reconciled in a way that involves firms in far less bureaucracy. We abolished the audit requirement for many small firms, saving them a great deal of money, so we are doing our best.
	The right hon. Gentleman really must look at where the £10 billion that he mentioned comes from. A great deal of it comes from the minimum wage. He must ask himself, as we must all ask ourselves, whether the minimum wage is the right policy or the wrong policy. I believe that even most of the employers who were sceptical at the time of its introduction believe that the minimum wage is fair and has been properly implemented. Unfortunately, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) opposed the minimum wage at the time. He said that it would cost 1 million jobs. He was absolutely wrong—1 million new jobs have been created, even with the minimum wage. I hope that we will have some clarity from the Conservative party regarding what they will do with the minimum wage in the future.

Claire Curtis-Thomas: I welcome the announcements made this afternoon in connection with manufacturing industry, especially the announcement of further tax breaks for capital investment. Will my right hon. Friend consider possible tax breaks for the services that allow that capital investment asset to be realised? Capital assets are sometimes enormously complex and although small businesses want to take on the new technology they lack the internal intelligence and experience to utilise it fully. If we can afford them some tax breaks in that area, we will increase our productivity rates accordingly.

Gordon Brown: Perhaps my hon. Friend would write to me on the specifics—that seems to be a second Budget representation. There are considerable tax advantages and reliefs at present for businesses adopting information technology—going online and adopting e-commerce. Perhaps she could advise the small businesses in her community that those advantages are available.

Several hon. Members: rose—

Mr. Speaker: Order. I regret that we must move on. The statement has run for an hour and 40 minutes—I regret that hon. Members are still rising to speak.

NEW MEMBER

The following Member made the Affirmation required by law:
	Christopher David Mole, Esq. for Ipswich

Speaker's Statement

Mr. Speaker: I have a short statement to make in relation to the Employment Bill.
	I note that right hon. and hon. Members who have tabled the reasoned amendment have very properly indicated a relevant interest on the Order Paper. The Bill concerns employment rights. As we all know, every Member who has staff in his or her parliamentary employment is an employer, but some Members may also be an employer in a different capacity, by virtue of activities outside their parliamentary duties. In my opinion, there is a risk that if every Member seeking to table amendments to the Bill indicates a relevant interest, based only on their position as a Member, the House, and those outside the House, will not be able to recognise any such additional relevant interests.
	I propose therefore that in the case of this Bill, and any others of such a nature that may come before us, the whole House take a common-sense approach and that Members be expected to indicate a relevant interest only where that is plainly additional to their interests as Members of the House.
	In that way, I think that the transparency which the rules on registration of interests are designed to demonstrate can best be ensured.

Point of Order

David Cameron: On a point of order, Mr. Speaker. Can you clear up some genuine confusion among Back Benchers? The Chancellor of the Exchequer said that the Wanless report was looking only at public funding of the health service; but the terms of reference were so different—especially in the light of the 1998 annual report from NatWest, which shows that Derek Wanless, along with the other NatWest directors, was actually paid private health insurance as a benefit. Was that something that the Chancellor could have looked into in terms of expanding health funding?

Mr. Speaker: The hon. Gentleman had better ask the Chancellor, not the Speaker.

Compulsory Voting

Gareth Thomas: I beg to move,
	That leave be given to bring in a Bill to amend the Representation of the People Act 1983 to make voting compulsory in all Parliamentary elections; and for connected purposes.
	I believe that everyone has a responsibility to vote, to cast judgment on those of us who are elected to the House, on the parties that we represent and on our handling of the important national issues of the day and key local constituency concerns. Even if a guarantee could be given that turnout in parliamentary elections was set to rise dramatically, the Bill would still be entirely justified, but the fact that the turnout on 7 June was the lowest since universal suffrage was introduced adds a particular urgency to the case for compulsory voting.
	Elections are a test of opinion in the country. They are a way of holding politicians to account and legitimising our elected bodies. When the turnout is high, elections are more representative, the elected bodies more legitimate and politicians more accountable.
	In addition, if rates of turnout are different between sections of the electorate—between different communities, or between those on different incomes—there must be a risk of political parties prioritising the concerns of those most likely to vote. We are not at that stage in this country—Labour Members are certainly not—but some commentators certainly believe that low turnouts in America have focused the collective minds of the parties on those who vote regularly and argue, in turn, that the sense of alienation from the political process has increased among marginalised groups.
	Some members of the Labour party have asked me to justify proposing compulsory voting when it is possible that, for whatever reason, only a Conservative and a Liberal candidate had stood for election. I would not dream of asking any good socialist to make that appalling choice. Instead, my Bill would require voters to attend polling stations and vote either for one of the candidates on offer, as now, or to register their abstention—their protest at the system or the choice before them—on a new slot on the ballot paper.
	Some people say that compulsory voting would mask wider problems of participation in the political process. Of course, I agree that political parties, we as politicians and other political organisations need to make more effort to champion political debate for its own sake, to promote a sense of citizenship, to engage with those groups least represented in the House and to celebrate the opportunity that politics offers to make a difference to the communities from which we all come, but initiating debate on how to tackle those wider issues should not be used as an excuse to put aside the specific debate that needs to be held again about voter turnout at elections.
	I pay tribute to the work that my right hon. Friend the Foreign Secretary did when he was at the Home Office to promote a series of experiments to drive up turnout, one of which—easier access to postal voting—was undoubtedly very helpful to many at the last election. Many people did not vote at that general election because they did not think that there was ever a realistic danger of the Tory party being elected. Nevertheless, the fact that more than 40 per cent. of electors did not vote rightly set alarm bells ringing across the political world.
	What are the alternatives to compulsory voting? One alternative is to do nothing and to hope that turnout somehow improves. I certainly do not support that. Another alternative that has been canvassed is to offer people an incentive to vote—£10 off their council tax, or 1p off income tax. At the risk of provoking some of those who are genuinely engaged in the debate about turnout at elections, I suggest that there is something slightly odd about paying people to vote. What evidence is there to show that such a move would seriously drive up turnout?
	Compulsory voting is not an unproven, alien concept. My hon. Friends the Members for West Bromwich, East (Mr. Watson) and for Alyn and Deeside (Mark Tami), in their excellent Fabian Society pamphlet on this subject last year, highlighted a study of 44 democracies around the world, and an element of compulsory voting was evident in 13 of the 44—30 per cent. of those studied. Compulsory voting operates successfully in Belgium, Luxembourg, Greece and, I understand, in four of the eight provinces in Austria, as well as in a host of other countries on other continents. It operates perhaps most effectively in Australia, where turnouts of more than 95 per cent. are regularly achieved and just 2 to 3 per cent. of people abstain, with just the threat of a $20 fine to encourage adherence to the law.
	Some argue that appalling breaches of civil liberties would be committed were we to require people to register their abstention, but compulsory voting is surely just a logical extension of the legal requirement to register to vote. Is being asked to vote once every five years any more an infringement of liberty than having to fill out a census form once every 10 years or to do two weeks' jury service at some point in one's professional life? Compulsory voting involves a small decrease in freedom but—let us be honest—it is much less of a burden than other obligations that we place on our citizens, such as the requirement for compulsory school education or to pay taxes.
	Some argue that a reluctant vote is worse than no vote at all and that those forced to go to the polls against their will be unlikely to cast a well-considered vote. Frankly, that view is insulting or deeply patronising. Indeed, there is absolutely no evidence to justify such nonsense.
	Others argue that the enforcement of compulsory voting is a potential nightmare. In Australia, however, compulsory voting has delivered high turnouts without the need for heavy penalties. When a voter is recorded as not voting, the Australian Electoral Commission sends out a letter asking for an explanation. After the 1993 election, the AEC investigated almost 500,000 cases of non-voting. The vast majority—more than 462,000 people—gave valid explanations of why they had not voted.
	The valid explanations included the fact that people were overseas at the time or that they belonged to a religious order that prohibited voting. Another 23,000 chose to pay the $20 fine straight away. That left a small group of just about 4,000 who went to court, where the fine increases to $50 on conviction. However, not all in that group were convicted.
	In general in Australia, the penalties for non-voting are relatively small, as I propose that they should be under this Bill. When there is a wide acceptance of reasonable excuses—again, as I suggest there should be—there has been a marked increase in the number of people voting.
	Another comparison—a domestic one—is worthy of note. In this country, one can be punished for failing to register to vote. Registration is compulsory but prosecutions for non-registration are infrequent and usually amount to just a handful every year. The power to prosecute, though rarely used, remains a valuable means of achieving a high level of compliance with the registration process.
	We have reached the point where a serious debate about the merits of compulsory voting is urgent. Our forebears fought long and hard for the right to participate in elections. After all, elections are a test of political opinion like no other; they are the defining assessment of the Government and the political leadership of our country. Surely it is not too much to ask that we take 30 seconds out of our busy lives every five years to make a judgment on those who seek to lead us.

James Plaskitt: I oppose my hon. Friend's Bill. Although he has raised a legitimate concern, he has identified entirely the wrong solution.
	The freedoms of choice in a democracy must include the freedom not to choose. Some people might always wish a plague on all our houses and it would be wrong to force them to participate. Others might wish not to express their choice from time to time when they do not feel that the options available are good enough, and we cannot force them to participate. We need to avoid the arrogant assumption that whatever we and the political parties offer to the electorate at any time is obviously good enough for them to make a choice: sometimes, for some of them, it will not be.
	My hon. Friend's Bill risks sending the unfortunate message to the electorate that we are saying, "We are offering you a choice. If you don't like it and it is not good enough for you, we are afraid that we shall still make you choose from among the options."
	My hon. Friend suggests a way out in his proposal to allow space for a registered abstention on the ballot paper, but that is not a sufficient solution because an abstention expressed on the ballot paper may be no different from one recorded by staying at home.
	My hon. Friend runs the risk of forcing many resentful voters to the ballot box. I fear that it would not be long before minority parties, extreme parties or fringe parties saw an opportunity to place themselves on the ballot and perhaps garner many votes that they would not otherwise have received from resentful voters who do not wish to be at the ballot box and who choose not to mark the abstention slot.
	My hon. Friend should think about what it is in our system that imposes discipline on our political parties. Abstentions send a message to us from the electorate, and we are right to be concerned about that. We became used to participation in the 70 to 80 per cent. range, but it suddenly dropped to 59 per cent. at the last general election. The complacent view is that that does not matter because it reflects electoral contentment. I think that that is wrong.
	A more realistic view is that there is some disengagement from the process and some question about the legitimacy of us all, not just the Government. After all, allowing for errors in the register, approximately 35 per cent. of the adult electorate did not vote in the last general election, compared with 25 per cent. who voted for Her Majesty's Government, 19 per cent. for the Opposition and 9 per cent. for the Liberal Democrats.
	If that unsettles us, instead of forcing people to the ballot box we should think about what choice we offer the electorate, how we communicate it and the nature of elective politics in the 21st century, because that would be the system responding to the message that the electorate are sending us via their abstention. It is an indirect response, but it is a response, and it will come about only if we consider the message and not obscure it by hiding it under forced participation. If there is an issue to address, as my hon. Friend believes there is, we need to confront it, not conceal it.
	We also need to think about the process of democracy. Most of the responses that need to be produced to deal with my hon. Friend's concerns should be in the policies that parties offer the electorate and the way in which they communicate them to the electorate. Some of the answer lies in the electoral process. All votes are not of equal value in our electoral system and about 15 million of our voters are partially disfranchised by living in constituencies where parties of their first choice have no chance of winning. That in itself is a disincentive to participation. I do not suggest that changing the voting system will address all the issues that my hon. Friend raises, but it will go some way towards doing that and it forms part of the solution.
	Finally, there is the matter of rights and duties. We speak in the House of the right to vote; and that is what it is—a right. It has been fought for, as my hon. Friend said, and as a democratic people we rejoice when others win that right and escape after years of tyranny. He was also correct when he said that with rights come responsibility, but as a true democracy we should hesitate before we forcibly turn those rights into an obligation and introduce sanctions to prevent the exercise of free choice.
	We need to be more humble in the face of the message that the electorate are sending by their level of participation, less arrogant about the virtues of the choice that our political parties offer and far more careful about turning a right based on freedom into an obligation to the state. We should smarten up our act as politicians and improve our democracy, but I urge the House to reject compulsory voting.
	Question put, pursuant to Standing Order No. 23 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.
	Bill ordered to be brought in by Mr. Gareth R. Thomas, Fiona Mactaggart, Mr. Paul Marsden, Mr. Peter Kilfoyle, David Winnick, Linda Perham, Mr. Tom Watson, Mark Tami, Mr. Tony Colman and Martin Linton.

Compulsory Voting

Mr. Gareth R. Thomas accordingly presented a Bill to amend the Representation of the People Act 1983 to make voting compulsory in all Parliamentary elections; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 18 January, and to be printed [Bill 58].

Orders of the Day
	 — 
	Employment Bill

Order for Second Reading read.

Mr. Deputy Speaker: I must tell the House that the Speaker has selected the amendment in the name of the Leader of the Opposition.

Patricia Hewitt: I beg to move, That the Bill be now read a Second time.
	Earlier this afternoon, we heard from my right hon. Friend the Chancellor about the steps that he has taken to deliver a stable economic framework and thus to ensure that the United Kingdom is better placed than any other major industrial economy to withstand difficult times in the world economy. On the basis of that foundation of economic stability, our priority is now to deliver a high-skill, high-productivity economy. Productivity is not about working people into the ground; it is about skilled people in high-performance workplaces, where employers and employees work together in an effective partnership.
	That approach, the approach of a Labour Government, is supported by the TUC and the CBI in their recent productivity report, in which they argue that
	"new forms of work organisation, effective management leadership, a culture that encourages innovation, employee involvement and development tailored to organisational needs are all necessary conditions for adaptable, high performance workplaces."
	We aim to strengthen that approach through this Bill, creating a social partnership to enable businesses and the people who work in them to achieve their full potential.
	Nobody, not even a Member of this House, should have to choose between being a good parent and being an effective worker. We all know that stress in the workplace is on the increase, and that stress is bad for children, for parents and for business. Modern organisations with good workplaces have already recognised that family-friendly working makes sense. Good businesses recognise the link between effective employment relations and success in the marketplace. However, there are still too many workplaces that seem to be run by managers who believe that every worker has a wife at home, and who assume that the only way to organise a job is in the way it has always been done.
	Getting all our workplaces to adapt to the reality of modern families is a huge cultural change. The Conservatives, of course, believe that such changes should be left to the market, but if we left matters to the spread of best practice through a voluntary approach, it would take 20 years to secure the changes that we want, and parents and employers simply cannot afford to wait that long. By setting new legal standards, as we will do in the Bill, we will put family-friendly working on the agenda of every workplace and bring these changes forward by a generation.

Kevin Hughes: The Secretary of State is proposing welcome new rights for paternity and paid adoption leave in the Bill, but does she share my concern that about 2.5 million workers who fall below the lower earnings limit will be left out of those excellent proposals?

Patricia Hewitt: My hon. Friend raises an important point. We have already reformed the national insurance contributions system to promote the employment of workers at the bottom end of the labour market. I am sure that my hon. Friend and other hon. Members will want to focus on the interaction between the contributions threshold and the system of employment protection when the Bill goes into Committee.

Tony Lloyd: The Bill is bedevilled by a split definition, which defines someone as an employee, but not a worker. My right hon. Friend will be aware that that is a fundamental point in industrial legislation. How will progress be made on that and other aspects of labour law? When will the review take place? Will my right hon. Friend give a guarantee that, where change is necessary, legislation will be introduced during this Parliament?

Patricia Hewitt: My hon. Friend makes an important point which I know is of concern to many Labour Members. As I have already made clear, we shall shortly embark on a review of the provisions of general employment law that relate to the distinction between an employee and a worker. As my hon. Friend well knows, these are enormously complicated legal matters on which we want to consult carefully. I anticipate that the review of the employee/worker distinction will begin early in the new year.
	It is not the job of Government to tell parents how to lead their lives, but it is our job—and a responsibility that the Labour Government take seriously—to help parents choose how best to combine earning a living with bringing up children. In the past four years, we have done a great deal to help families fulfil their double responsibilities: 1 million women and 500,000 men benefit from the national minimum wage; more than 3 million workers have enjoyed four weeks' paid annual holidays for the first time; we have introduced the working families tax credit and higher child benefit, with a new children's tax credit to come; there are 800,000 new child care places, another 800,000 on the way, new rights for part-time workers, and, of course, the right to trade union recognition.
	Not one of those measures was supported by Opposition Members. If they are shown fair standards for working people, all they can do is complain about burdens on business. The Bill builds on the achievements that we delivered in our first term. It will improve conditions for working parents, simplify and improve procedures for resolving disputes between management and workers, and strengthen support for training and learning at work.

Chris Grayling: While no one could disagree with the principles of what the right hon. Lady is trying to achieve, does she not realise the practical impact on small business of tilting the balance of regulation heavily in favour of the employee and against the employer? In small organisations with a handful of workers that will make it very difficult indeed to run the business effectively.

Patricia Hewitt: I have spent most of my working life running, and working in, small organisations. As the hon. Gentleman will find when I come to some of the Bill's detailed provisions, all the way through, we started with the needs of small businesses and the people working in them uppermost in our minds.
	Part 1 will enable mothers to take up to six months' paid maternity leave and will extend paid time off to fathers and adoptive parents, as my hon. Friend the Member for Doncaster, North (Mr. Hughes) said, for the first time. Separate regulations will increase maternity pay from £62 a week to £100, and extend maternity leave so that mothers can take up to a year off work to look after a new baby.

Norman Lamb: Does the Secretary of State regard the two weeks' paternity leave provision as an end point or, alternatively, a staging post on the way to the ultimate goal of better provision? I am aware of the Government's intention to try to balance better the mix of work and parental responsibilities, but the provisions for unpaid parental leave introduced in the last Parliament have resulted in an extremely low take-up of that right. By contrast, in many other European countries, the right is taken up to a considerable extent, because it is paid. It seems to be a case of tinkering at the edges. Is the Secretary of State prepared to set a goal of improving rights to paid leave, or is this the end point?

Patricia Hewitt: The hon. Gentleman raises an important point. We are determined to improve conditions for fathers, as well as mothers. Two weeks' paid paternity leave is an enormously important reflection of the responsibilities that a new father is taking on, but we have also already introduced, for fathers as well as mothers, new rights to parental leave. The new rights to family-friendly working, with which I shall deal in a moment, will apply to fathers of young children, as well as to mothers.

Stephen Ladyman: I am grateful to my right hon. Friend; she has been most generous with her time. What she is doing through the Bill is wonderful, and she knows that it has my full support. During the consultation period, the possibility was considered that when the relevant period for maternity pay was calculated, it could be changed from eight weeks to 26 weeks. That would help people on very low and fluctuating wages, such as shopworkers. That is not in the Bill at this stage. Will my right hon. Friend give the matter further thought?

Patricia Hewitt: My hon. Friend is right—that provision is not in the Bill. We consulted on it, but it is not in the Bill because we are trying to simplify an extraordinarily complicated system of administering maternity pay and leave. It became clear from the consultation that although the provision to which my hon. Friend refers would have offered some benefits, it was too complicated and too onerous, especially for small organisations.
	The Bill, and related regulations, will simplify the system for maternity pay and leave, making it easier for businesses to understand and administer. We are also, separately, increasing the support that small businesses receive for administering maternity pay, with the result that about six out of 10 of all firms paying maternity pay will be able to reclaim their costs in full. We are also introducing changes that will allow firms to claim back the money that they pay out in maternity pay in advance—a particular bonus for small firms.

Philip Hammond: Can the Secretary of State confirm that, for the 60 per cent. of firms that can reclaim their costs in full, those costs will include the employer's national insurance contribution, as well as the pay, in full, recoverable by the firm?

Patricia Hewitt: Yes, I believe that that is the case.
	As I announced last week, we will include in the Bill new provisions to promote family-friendly working. In Committee, we will table amendments to implement the recommendations of the work and parents taskforce, which I published on 20 November. Those provisions will set new legal standards for family-friendly working, ensuring that where parents—fathers as well as mothers—of young children ask for changed working hours, employers will have a duty to find a solution, wherever possible, that suits both the worker and the business.
	In drawing up these measures, our priority, and that of the taskforce, has been to adopt a light-touch approach, working with the grain of existing best practice and taking particular account of the needs of small firms. I thank all the members of the taskforce, particularly its chair, Professor Sir George Bain, for their hard work in preparing the report.

Philip Hammond: On a point of order, Mr. Deputy Speaker. I am sorry to interrupt the Secretary of State, but for guidance, would you advise us whether it is in order for Members to discuss matters which are not in the Bill before us, but which might be introduced at a later stage, or whether all Members are limited to discussing only what is in the Bill?

Mr. Deputy Speaker: This is a Second Reading debate, so provided the matters being debated are relevant to that, they are, by and large, allowable.

Patricia Hewitt: I am grateful to you, Mr. Deputy Speaker. I note that the amendment tabled by the hon. Member for Runnymede and Weybridge (Mr. Hammond) calls for a wider debate on these issues. I should have thought that it was helpful to him, as well as to the House, to know our intentions in respect of amendments to the Bill.

Joan Humble: Among the excellent measures in the Bill are the provisions to simplify the regulations for maternity pay and maternity leave. Will my right hon. Friend assure me that the Government will publicise those changes? When I speak to many of my constituents, they are bewildered by the existing rules and regulations, and look forward to changes. I am concerned that they may not be aware of some of the changes that are to be introduced.

Patricia Hewitt: My hon. Friend makes an extremely important point. Everybody is bewildered by the existing system of maternity pay and leave, which is quite incomprehensibly complicated. The new arrangements will take effect in April 2003. In the months leading up to that time, and also subsequently, we will ensure that employees and employers alike are aware of the new arrangements and the benefits that they will bring.
	The new arrangements on flexible working that we will introduce by amendment to the Bill have been described by Digby Jones, Director General of the Confederation of British Industry, as
	"a workable deal for employers and employees, which will raise awareness of the benefits of flexible working."
	The Trades Union Congress said:
	"They will give parents a new opportunity to seek flexible working. The best employers already agree flexible working patterns because they can see the advantages."
	The Equal Opportunities Commission has welcomed the fact that
	"for the first time employers will have an explicit duty to properly consider fathers as well as mothers' requests to work part time."
	Of course, many employers in both the public and private sectors are already leading the way in raising productivity through effective partnerships with employees. However, there are still far too many cases of bad practice that harm both the employer and the worker. Some hon. Members may have seen in the news recently the case of Neil Walkingshaw, a car mechanic who went to the employment tribunal after being refused shorter working hours to enable him to care for his young son. He wanted shorter hours because he and his wife had decided that she should return to work full time. The employer's refusal to change Mr. Walkingshaw's working hours cost the latter his job, cost the business a skilled and experienced employee and led to considerable expenditure of time and money in a tribunal case—time and money that would have been much better expended on a small reorganisation of working hours to enable Mr. Walkingshaw to keep his job and continue contributing to the firm.

Chris Grayling: Surely the Secretary of State is not saying that employers should no longer have the right to judge whether they need a post to be filled on a full-time or part-time basis. If the Government go down that road, they will do enormous damage to the competitiveness of small businesses.

Patricia Hewitt: When the hon. Gentleman studies the report of the taskforce and reads the amendments that we will table, he will see that we are putting in place a very sensible set of provisions to ensure that, when an employee in a position such as Mr. Walkingshaw's asks for his working hours to be changed, his employer will be under a duty to consider the request seriously and to look at how it can be accommodated within the needs of the business. Of course there will be circumstances in which such a request cannot be accommodated, but it is clear from the practice in firms that have already taken the proposed route that it is possible in most cases to accommodate such requests to the benefit not only of the employee, but of the business.

Andrew Turner: Will the Secretary of State explain whether the benefit has to be extended not only to the employee in question and the employer, but to other employees of the business? For example, in a small care home, it will be difficult to rearrange the working hours of a single person without affecting those of other employees.

Patricia Hewitt: That is one of the issues that we would expect the employee who is making the request and the employer who is considering it to take into account. Very often, once an organisation starts considering the possibility of flexible working for one individual, it will find that it can meet other employees' flexible working needs in a way that also makes it easier for the business to meet the needs of its customers. We will support both employees and employers in implementing the changes. We will also monitor their impact after three years of operation. Let me make it clear that if we still find that a large number of businesses are refusing to take the claims of children and their parents seriously, we will take action accordingly.
	Minimum standards provide incentives for businesses to increase their productivity. That is exactly what we have seen in respect of the national minimum wage. We were told by Opposition Members that the national minimum wage would be a disaster, that it would cost a million jobs and that businesses would close as a result of its introduction. Of course, nothing of the kind has happened. The Low Pay Commission, which is also chaired by the excellent Professor Sir George Bain, found that the national minimum wage had helped many employers who pay it to perceive their work force as an asset in which to invest rather than a cost to be minimised. Consequently, they get better quality and results.
	Parts 2 and 3 provide further incentives for businesses to raise productivity, and to follow best practice. The Bill gives incentives to employers and employees to resolve disputes in the workplace through dialogue rather than litigation. Most organisations already have proper procedures for dealing with disagreements between the management and an employee. However, half of all cases that end up before tribunals are from firms that have no proper internal grievance or disciplinary procedures. They waste taxpayers' money because they have not bothered to put proper procedures in place. The Bill provides for simple, three-step disciplinary or grievance procedures in workplaces where they do not already exist.
	Rights and responsibilities go together in the Bill. For example, employers have a responsibility, if they are unhappy with an employee's performance, to tell that employee what is wrong and to deal with the problem. Employees have the right to fair procedures in the workplace; they also have a responsibility to use them.
	One would imagine that it was pure common sense for managers and staff to talk to each other. Yet it does not always happen. Not only are there cases before tribunals in which an employer has no procedure or has failed to follow it; we also hear from some employers that receiving the copy of a tribunal application is the first they know about an individual's grievance. The Bill will ensure that the procedures are in place and that they are used in most cases.
	Of course, some cases cannot be resolved in the workplace. Employers and employees must then be able to rely on an effective tribunal system to determine the issues. The Bill and the work of the employment tribunal system taskforce will help to provide a better tribunal service to employers and employees.
	As with the proposals on family-friendly working, those on better dispute resolution are based on extensive consultation and dialogue. I welcome the fact that the director general of the British Chambers of Commerce has said:
	"These proposals will help businesses to help themselves, by ensuring that they follow good practice in their employment relations."
	William Sargent, chairman of the Small Business Council, described the proposals as
	"very clear measures, which are fair both to small businesses and their employees."

Helen Jones: Although many of the provisions for dispute resolution are welcome, does my right hon. Friend agree that the extension of costs orders in employment tribunals is likely to deter many of the people who need them most? They will deter those who are in small, non-unionised firms without back-up who do not have legal training and to whom even the thought of such costs will be frightening. Such employees do not have the legal training to understand the cases in which those costs are imposed. Will my right hon. Friend consider the matter carefully when the measure is in Committee?

Patricia Hewitt: Of course we will consider carefully the position of individuals who do not have legal knowledge or representation. I hope, however, that I can reassure my hon. Friend by stressing that, of 18,000 cases, only 252 resulted in a costs order. We must deal with employers who persist in defending a case although it is crystal clear on all the evidence that they are in breach of the law—for example, by refusing holiday or notice pay that is due to the employee. We must also tackle an employee or former employee who withdraws his application the night before a hearing, having led the employer to waste a substantial amount of time on preparing a case that is never heard. I have described a minority of cases, but we need to tackle the problem.
	The Bill covers several other matters that contribute to the overall purpose of making the workplace function better. We are placing union learning representatives on a statutory footing because they are a key element in our drive to improve the quantity and quality of workplace development, especially for those who are most likely to miss out on training—for instance older workers, part-time employees and people from some of our minority ethnic communities.

David Chaytor: On union learning representatives, does my right hon. Friend agree that today's publication of the performance and innovation unit report on work force development means that the debate has perhaps moved ahead of the Bill? It provides opportunities only for workplaces that already have a trade union recognition agreement. The major problems to do with work force development and lack of skills in the work force are in places where trade unions are not recognised. Will my right hon. Friend consider extending the rights to workplaces that do not have trade union recognition agreements?

Patricia Hewitt: We will consider the PIU report with interest. The Government's steps to promoting learning and training, especially among those who lack even the most basic skills, are not confined to the Bill. None the less, it will increase the availability of training and learning in organisations in which unions are recognised, but which continue to have the problem, especially at the bottom of the workplace, of people without adequate skills.

John Whittingdale: The Secretary of State has cited business organisations that approved of specific provisions. Do any employers' organisations support the proposals for a statutory right for paid time off for trade union learning representatives?

Patricia Hewitt: The Confederation of British Industry.

Hugo Swire: Will the right hon. Lady give way?

Patricia Hewitt: No, I have given way extensively and I want to conclude my remarks.
	The Bill also tackles discrimination against employees on fixed-term contracts. We are introducing work-focused interviews for partners of working-age people who are on benefits—

David Heath: Will the right hon. Lady give way on that point?

Patricia Hewitt: Let me finish the sentence. We are introducing such interviews so that we can help people to build on their skills and potential, and tackle any obstacles to work.

David Heath: Will the Minister give way?

Patricia Hewitt: I have already said that I have given way several times and that I would prefer to conclude.
	We are introducing equal pay questionnaires to make it easier for people who believe that they may be suffering an injustice to request key information from the employer from the start, when they are deciding whether to bring such a case.
	Good employers treat their employees with respect. They invest in people's skills, help people balance work and family and have sensible procedures for resolving disputes.
	Millions of employees already enjoy good working conditions in the best organisations, whether large or small, in the public or the private sectors. However, too many employers do not follow that good practice. The provisions will help to raise standards in the workplace and will thus help to close the productivity gap between the United Kingdom and our competitors. That will help to provide higher standards and a better quality of life for us all.
	The measure is supported by employers, unions and family groups. It will raise standards for employees and promote higher productivity. It could never have been introduced by a Conservative Government; the Labour Government proudly introduce it. I commend it to the House. 5.59 pm

John Whittingdale: I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:
	"this House regrets that a wider debate has not taken place on how the benefits and burdens arising from the Employment Bill are shared between individuals and the workplace; declines to give a Second Reading to the Bill because, although it contains welcome measures which promote family friendly practices in the workplace and which seek to improve dispute resolution procedures, it depends excessively on secondary legislation which is likely to impose significant extra burdens on business, especially small businesses; and because it will impose extra costs on business, further damaging British competitiveness at a time when manufacturing industry is already in a fourth successive quarter of recession."
	Let me start by declaring an interest as the employer of an assistant who helps me with my constituency work. Following Mr. Speaker's earlier ruling, I would like to withdraw the interest that I registered against my name on the amendment to the Bill, as I understand that it is now no longer necessary for it to be there.
	The Bill has come as a surprise to the House and to business. Just five months ago, the Queen's Speech contained no mention of an Employment Bill. In the debate on the Loyal Address, the Secretary of State spoke about an enterprise Bill, for which we are still waiting, and about the Sex Discrimination (Election Candidates) Bill, but she made no mention of the 53 clauses of further employment legislation that we are debating today.
	Some of the measures in the Bill are welcome, and I shall set out our approach in detail in a moment. Overall, however, the Bill represents yet another raft of rights and entitlements for employees and trade unions, which will have the effect of adding still further to the costs, burdens and work load of businesses, and of small businesses in particular. It is extraordinary that, in the press release that announced the publication of the Bill, the Secretary of State claimed that the Bill would reduce red tape for employers. The truth is exactly the reverse, as almost every organisation representing business has made clear in their detailed comments about the Bill.
	The Bill needs to be viewed in the context of the present state of the economy. My right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) has already done a great deal today to puncture the balloon of self-confidence that envelops the Chancellor of the Exchequer. It is crucial, when considering employment measures of this kind, to keep in mind the climate facing British business today. Across the world, economies are slowing and business men are having to operate in a harsher climate in which competitiveness counts above all. Although the British economy as a whole may escape a recession, manufacturing industry has been experiencing one for almost a year. Every business survey has shown a worsening outlook, with increased uncertainty and pessimism. When asked what the Government could do to help, business men have time and again pleaded for relief from the burden of regulation.
	The Organisation for Economic Co-operation and Development's report on the UK economy highlighted the
	"considerable volume of new regulations."
	In its pre-Budget report, the Engineering Employers Federation said:
	"The growing burden of regulation remains a serious concern for business—increasing costs, reducing flexibility and diverting management time from efforts to increase productivity."
	The British Chambers of Commerce stated earlier this month that
	"there is a mountain to climb in halting the tide of regulation sweeping business."
	The European Commission has said that the regulatory burden on companies is heavier here than anywhere else in the European Union. Even the Chancellor of the Exchequer spoke this afternoon of the need to cut red tape. Yet, within a few minutes of his sitting down, we are faced with another Bill that will add a little bit more to the burdens on business. The result will be that we slip a little bit further down the international competitiveness league.

Tony Lloyd: Will the hon. Gentleman do us the favour of saying which of the existing protections for people in the workplace the Opposition regard as the red tape that they now want to get rid of? It would be helpful to have a specific answer to that question.

John Whittingdale: The Secretary of State made it clear in her opening speech that we have opposed the imposition of extra burdens on business on many occasions. Such measures have to be taken cumulatively. We have to consider the overall effect of all the regulations taken together.

Hugo Swire: Does my hon. Friend agree with me and, more importantly, with Ruth Lea, the head of the policy unit at the Institute of Directors, who has today pointed out an increase in the regulatory burden on business, and who goes on to say that
	"there is now little doubt that the cumulative increase in the regulatory burden on business over the last four years has been considerable and is beginning to damage business's flexibility and competitiveness"?

John Whittingdale: My hon. Friend is right, and it is not only the Institute of Directors saying that. Every business organisation that one cares to consult says that the biggest problem facing business in this country is the burden of regulation, yet the Government are steadily increasing it.

Frank Doran: If the hon. Gentleman will not tell us which of the regulations introduced by this Government he would get rid of, will he tell us which of the 3,000-odd regulations made in each of the 18 years of Tory Government he regrets?

John Whittingdale: I must point out to the hon. Gentleman that, as my right hon. and learned Friend the shadow Chancellor made clear in his response to today's statement, the number of regulations introduced under this Government has reached an all-time record.

David Chaytor: Will the hon. Gentleman be more specific on the question of which regulations he would abolish? Does he, for example, think that investment in human capital and in the skills of the work force—which is partly what the Bill is about—are measures that he would like to do away with?

John Whittingdale: I am all in favour of investment in human skills in the workplace, but we cannot achieve that through compulsion and regulation. I will deal with that specific element of the Bill in a moment.

Rob Marris: I should like to declare an interest in that my constituency received money from the Transport and General Workers Union before the general election was called.
	I want to turn the question around and ask the hon. Gentleman what regulations he would keep. It is a simple question. Which ones does he think are worth having, and which ones would he get rid of?

John Whittingdale: Unfortunately, it seems unlikely that we shall be in a position to make that judgment for a few years. When we do form a Government, we shall need to consider all the regulations, and I am afraid that there will be a whole lot more by the time that happens. This flow is relentless, and we know that there are more to come. I hope that the Secretary of State will be able to listen to and answer the pleas of business, and to make it clear that she will not introduce further regulations after the many that are contained in the Bill.
	Part of our problem is that the cost to business of the regulations in the Bill is extremely difficult to judge. As is often the case with legislation introduced by this Government, the Bill contains enabling legislation that will result in many of the new regulations being introduced by statutory instrument at a later date. Business is in no doubt as to the overall effect of the Bill, however. My hon. Friend the Member for East Devon (Mr. Swire) quoted the Institute of Directors. I would cite the example of the Federation of Small Businesses, which has said that the Bill is a
	"raft of legislation too far."
	The Confederation of British Industry has said that this must be the only piece of new employment legislation in this Parliament. As I have already suggested, we know that that is not going to be the case. Only two weeks ago, we had the consultation paper on flexible working. We are now informed by the Secretary of State that many more regulations are to be incorporated into the Bill in Committee. In two weeks, another consultation paper will be published, this time on discrimination in the workplace on grounds of age, religion and sexual orientation. There is, therefore, no prospect of the halt to the flow that business asks for time and again.
	Any measures that help to resolve more disputes in the workplace without recourse to litigation are desirable and necessary. The Secretary of State has on several occasions drawn attention to the trebling of the number of claims to employment tribunals in the past 10 years, and the cost that that has imposed on business. The CBI estimates a total cost to British industry of £633 million a year. The Government's own consultation document estimates the average cost to an employer of each application at around £2,000. Many employers put that figure considerably higher.
	Yet it is this Government who have extended employment rights to whole new categories of workers, shortened the qualifying period before appeals can be made to an employment tribunal and increased the ceiling on compensation payments. It is therefore hardly surprising that there has been a large increase in applications in relation to those rights.
	We support the proposal to require employees to use internal grievance procedures to resolve disputes in the workplace without going to a tribunal, but we are concerned that the Government have significantly watered down their original suggestion in the face of pressure from their Back Benchers and the trade unions.
	Like the Federation of Small Businesses and the Institute of Directors, we are disappointed that the Government have dropped the proposal to require applicants to pay a charge for bringing a claim. The Government suggest that it did not receive widespread support, but a Forum of Private Business survey found that 80 per cent. of respondents supported it.
	The Government have made optimistic forecasts that their proposals will cut applications by a quarter with savings to employers of about £70 million, but significant costs will fall predominantly on small employers. Those are acknowledged in the Bill's regulatory impact assessment, and a number of legal experts have already cast doubt on the effectiveness of the remaining provisions.
	The Secretary of State seemed to suggest that there may be a probationary period in which to consider whether the flexible working proposals have been taken up. If they are not, the Government may have to revisit the issue. Will she give the same undertaking on these proposals? If the number of employment tribunal applications does not decrease, perhaps she will reconsider whether further measures are necessary, in particular the proposal she made in the consultation paper to introduce a charge for applying to a tribunal?

Tony Lloyd: Let us follow the logic of the hon. Gentleman's argument that there is a need to provide a deterrent. Does he also accept that charging those who respond to tribunals would provide balance and prevent the rogue employer from taking cases to tribunals?

John Whittingdale: The employer does not take a case to the tribunal and legislative provision has already been made for costs to be awarded, but that failed miserably, as costs are awarded on hardly any occasion. If a deterrent is needed, it is one against the people who bring cases in the first place, and those are the employees.
	The proposals to help families to meet their responsibilities at home and at work have their attractions. It is clearly a good thing that new mothers and, indeed, fathers should be able to spend time with their children. There is, however, no doubt that such entitlements carry a price that will be borne by employers and other employees.
	Large employers face the cost of having to find 8 per cent. of the amount payable to mothers, fathers and adoptive parents and, indeed, the national insurance contributions, to which my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) referred. The Government estimate that that will lead to an annual cost to business of up to £200 million, with a one-off additional cost of up to £30 million.
	Although small employers will not be required to contribute to the cost, the provisions could have an even more serious effect on them. Large employers will be able to provide cover for absent workers without too much difficulty—they can more easily deal with the administration of the new entitlements—but as the CBI says, those new rights pose significant challenges for smaller firms, which may struggle with the increased absence of key staff members.
	In a small firm employing four people, two pregnancies would result in losing half the work force, possibly at a key time for the business' future.

Hugo Swire: Does my hon. Friend agree that the Bill's similar treatment of small and large businesses is regrettable? The small tourism-related businesses, small residential care homes and farms in my constituency were hit hard by foot and mouth. Some provisions are insensitive and untimely but not only need to be revisited to take account of the seasonal nature of those businesses and their smallness.

John Whittingdale: I entirely share my hon. Friend's view. There is no doubt that the Bill will impose increased costs on all businesses, but the small businesses will bear the biggest burden. As my hon. Friend rightly makes clear, this is already a difficult time for business people and some small businesses are unlikely to be able to bear the additional costs imposed.

Chris Grayling: rose—

David Chaytor: rose—

John Whittingdale: I give way first to my hon. Friend the Member for Epsom and Ewell (Chris Grayling).

Chris Grayling: This question involves not simply businesses small, medium and large, but the impact on schools and other small public service providers. Many head teachers are genuinely concerned that they will be unable to deliver the same quality of teaching if they lose key people. The issue goes much further than business.

John Whittingdale: I agree. I have no doubt that in my hon. Friend's constituency, as in mine, schools find it almost impossible to get staff to cover teacher absences. If teachers are to be given longer absence entitlements, the pressure on school staff will increase, making it almost impossible for head teachers to provide the cover that they need.

David Chaytor: If the hon. Gentleman owned a small firm with four employees and two became pregnant, what would he do? Would he sack them or work them on the shop floor until their waters broke? He should tell the House.

John Whittingdale: The vast majority of small and large firms will give entitlements. They want to help employees who find themselves in such circumstances. The answer is not legislation, because there will be occasions on which such firms simply cannot afford to give longer leave entitlements. They will suffer as a result of the Bill.
	I must touch on the provision to allow smaller firms to apply to the Inland Revenue for advance funding should they find it difficult to meet the extra payment required. Although I welcome the fact that small employers will be allowed to apply for advance funding, the procedure involves a significant extra administrative burden. As the Federation of Small Businesses points out, it is almost impossible to see how the Bill will reduce red tape.
	Employers will not be alone in incurring an extra burden as a result of those rights, as there is growing recognition that extra rights for parents will inevitably result in extra burdens on non-parents in the workplace. Big companies offering more generous leave entitlements and benefits to parents already consciously discriminate against non-parents, although there may be good reason to do so. Parenthood is desirable for society generally and it should be encouraged, but it is bound to lead to resentment among childless women and men if they have to work harder for less reward than their colleagues who have children. Yet that aspect of the debate on family-friendly work practices has been ignored by the Government. Again, the matter deserves far more consideration.
	Some of those arguments apply equally to the Government proposals on giving employees the right to request flexible working hours. Although they are not yet in the Bill, the Secretary of State confirmed that additional measures will be inserted in Committee to take account of the announcements made a week ago. Like the CBI, we welcome the fact that employees will not be given an automatic right to expect flexible working, but there is no doubt that the proposals will result in another category of cases that must be considered by employment tribunals, adding to their work load.
	As proposals to reduce the number of cases going to employment tribunals are to be included, it is ironic that the Government are introducing a new category through their amendments. Again, the measures will result in greater costs to small firms, in particular the expense involved, the additional time required and the disruption to their business.
	The Bill seeks to extend to employees on fixed-term contracts the rights enjoyed by permanent employees. In fact, it is already possible to claim unfair dismissal to an employment tribunal in connection with failure to renew a fixed-term contract. The Government now wish to give fixed-term employees equivalent rights, including rights involving pay and pensions, that were not covered by the original European Union directive on which this part of the Bill is based.
	That bit of gold-plating by the Government will make some employers ask what is the point of taking on employees on fixed-term contracts. Employers may feel that if such employees are to enjoy terms and conditions identical to those enjoyed by permanent employees, they may as well make them permanent employees and then sack them.
	In fact, many fixed-term employees benefit from higher rates of pay, as they do not enjoy other benefits such as pension entitlements. It is therefore essential for the equal-treatment requirement to apply to the overall package of terms and conditions if employers are to retain the flexibility that they need.

Russell Brown: Has the hon. Gentleman ever worked in a company in which fixed-term or short-term contracts have operated? Has he ever witnessed what people go through when working on an entirely different basis and in an entirely different environment from others, and the disadvantages experienced by those on fixed-term contracts?

John Whittingdale: The hon. Gentleman appears to be confirming that the Government intend to remove fixed-term employees from the work force. That certainly appears to be the direction in which they are moving. We do not know, however, because—again—we have not yet seen the detailed regulations covering this provision. Not until they are published will we be able to judge properly its impact on business. I hope that the Minister will make it clear that the Government will resist the pressure that has already been exerted from the Government Back Benches today to extend the provision to cover fixed-term workers, such as those supplied by agencies.
	The Bill also gives statutory rights to so-called union learning representatives. As the Government's consultation paper states, they constitute a new category of union activists. There are already about 3,000, and under the Bill they will have a statutory right to paid time off.
	Earlier, I asked the Secretary of State whether any employers' organisations supported the proposal. She told me that the CBI supported it. In its submission on the Bill, the CBI said that
	"the proposed right for unions to appoint union learning representatives without the employer's agreement is a step in the wrong direction."
	That strikes me as a pretty curious way of expressing support.

David Chaytor: Surely the CBI's objection is not to the establishment of learning representatives as such. Indeed, its submission supports the concept. Its objection is to inability to influence the number of representatives and, hence, inability to control the amount of time off.

John Whittingdale: The CBI's principal objection, and that of many other employers' organisations, is that the arrangement will be imposed on them through compulsion.

David Chaytor: The hon. Gentleman is not answering my question.

John Whittingdale: With respect, I am.
	Of course employers support the idea of increasing the amount of training given in the workplace. What they do not support is the mandatory requirement imposed by the Bill for them to accept union learning representatives and to have no say in who those representatives are, or indeed in how many are appointed. We share their objections. As the Engineering Employers Federation has said, this will not improve employee relations, productivity, or the learning levels of employees. Learning representatives will add value only when they work in partnership with employers. Compulsion will add to costs, and will do nothing to increase employers' commitment to training.

Malcolm Wicks: The hon. Gentleman should meet some.

John Whittingdale: With respect, let me tell the Minister that I am quoting what has been said by employers' organisations.
	Under the Bill, the number of learning representatives and their selection will be a matter solely for trade unions. That will clearly be open to abuse: employers must be given some say if trust is to be preserved in the workplace.
	Finally, let me deal with the provisions requiring partners of benefit claimants to undertake work-focused interviews. At the beginning of my speech, I said that the Queen's Speech had made no mention of an Employment Bill. What it did foreshadow was a welfare reform Bill. I ask the Minister to confirm that this is it: that the Government's much-vaunted intention of achieving fundamental reform of the welfare system has been reduced to a group of clauses headed "Miscellaneous" at the back of the Employment Bill. Of course we welcome measures to help benefit recipients return to work, but this piece of bureaucracy is unlikely to have much effect.
	A recent survey showed that in the past four years there had already been more than 50 changes in employment law. Small firms estimate that it is taking them up to 12 hours a week to deal with statutory requirements, at a cost to each of £8,900 a year. Some measures in the Bill are welcome, but its overall effect will be an addition to demands in terms of cost and time which many small businesses simply will not be able to meet.
	At any time those measures would be damaging to British business, but they are being introduced at a time when the outlook for many firms is already grim. The sad fact is that, while increasing employees' rights, the Bill is likely to lead in the long term to a decrease in the number of employees, because it will make the burden for some firms unbearable.

Joan Walley: I am pleased to speak about a Bill that will introduce so many improvements, and benefit so many of our constituents. I agree with the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) that competitiveness is all-important, but we should view the position in the long term. If we share the hon. Gentleman's short-sighted approach to employment relations, how can we end up with a skilled and flexible work force who want to make their company as competitive as possible? I was very disappointed by his mean contribution.
	Before I go into the details of the Bill—which will, as I have said, improve things substantially—let me say something to the Minister for Employment and the Regions. I much appreciated his taking the trouble to visit my constituency to discuss, in some depth, the many provisions in the Bill. I believe that similar consultation has taken place not just in my constituency but with the business community, and throughout the country. The fact that the Bill has not prompted a great deal of dissent is surely a measure of the success of the consultation undertaken so effectively by the Secretary of State and the Minister. I also thank the Minister for taking up in correspondence issues raised at a meeting that I had in Stoke-on-Trent.
	I should say at the outset that I am a member of Unison, and also that UCATT—the Union of Construction Allied Trades and Technicians—has a close working relationship with my constituency Labour party.
	I welcome the introduction of paid paternity leave, which has been well received by constituents to whom I have spoken. I am also glad that we are at last making real improvements to maternity leave and pay arrangements. That is great news for women, and I know that it will be welcomed in my constituency.
	Reference has also been made to the introduction of a questionnaire procedure for equal pay claims. If we had had such a procedure in the long years of the previous, Tory Government, and if that Government had introduced legislation properly as they were directed to do by Europe, we would not be in the current situation in which many women who worked in the mining industry are unable to claim what should have been theirs by right. That is an advance to be welcomed.
	Another advance is the right to time off for union learning representatives, underlining the important role played by unions in developing the skills of the work force. My hon. Friend the Member for Bury, North (Mr. Chaytor) was absolutely right to say that we as parliamentarians and as a Government are nowhere if we cannot recognise the importance of investing in the skills of the work force.
	In 1999, we were very fortunate in north Staffordshire to have one of the first union learning fund pilots which was operated by the Ceramic and Allied Trades Union. In a time of great change in the pottery industry, entailing much that we would prefer not to have seen, the pilot has grown to 18 learning representatives operating in most factories and pot banks across Stoke-on-Trent. Forty representatives at the CATU learning centre—which is funded jointly by Government and the Stoke-on-Trent college of further education, and with the support of manufacturers—are taking the learning agenda out to people, encouraging them to take up basic skills and take on relevant work, increasing their confidence and contributing to competitiveness. Those advances are welcome, and in the long term they will be as important as the advances in health and safety.
	I am very pleased that the Government have not heeded the siren voices calling for the introduction of charges for tribunal applications.

Hugo Swire: I think that I am right in saying that the hon. Lady has in her constituency one of the most successful British companies possibly in the world and certainly in the United Kingdom. Has she at any stage taken the trouble to go and speak to that company to discover whether it believes that any of the Bill's provisions will make it less competitive?

Joan Walley: I am very proud to say that we have many world-class manufacturers and other businesses across north Staffordshire. We have consulted with the chamber of commerce, with which we agree on some issues while having slightly different shades of opinion on others. None the less, I believe that we would not be treating our work force properly if we were to introduce a general costs regime that required the losing party to face all costs. The proposal in the consultation document to establish a presumption in favour of awarding costs was entirely wrong, and I congratulate my right hon. Friend the Secretary of State on the current proposals.
	The Government have recognised that charges and the risk of having to pay costs will deter lower-paid applicants from pursuing a case, however strong that case may be. Such an arrangement would in practice deny people the opportunity of exercising their statutory rights. Nevertheless, there may still be a problem which I hope that my right hon. Friend will examine both during proceedings in another place and in the light of the letter that I received from my hon. Friend the Minister for Employment and the Regions.
	The problem is that the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001, which were introduced in July, added to the list of circumstances in which an employment tribunal can award costs. Before the regulations were introduced, costs could be awarded when proceedings were brought vexatiously, abusively, disruptively or otherwise unreasonably. However, the word "misconceived" has now been added to that list. Consequently, not only poor behaviour but poor knowledge of employment law is to be penalised. The other change that was made in July is that the maximum costs that tribunals can award on the spot were increased from £500 to £10,000.
	I ask the Government to re-examine the changes. I am very grateful that a review body has been established, and I recognise that the Secretary of State said in reply to an intervention from my hon. Friend the Member for Conwy (Mrs. Williams) that costs had been awarded in only 252 cases. I wonder, however, whether the new regulations will substantially change that number. I ask her to examine the issue very closely. I would not want people without a union representative or someone else to turn to for help to be deterred from making a genuine case. I hope that we can make some progress on the issue.

Mark Prisk: Does the hon. Lady recognise that whereas it is true that many employees are not fully familiar with the law, millions of self-employed small business proprietors also are not legal experts and cannot afford a legal adviser when presented with a legal case? Is it not important that we also recognise their difficulties? Is it not important that the Government ensure that any changes protect them equally?

Joan Walley: I am very happy to agree with the hon. Gentleman on that. It is absolutely right that access to employment tribunals should not be based on the ability to appoint very expensive lawyers. There should be a basic right of access to information, and that right should apply as much to small companies and businesses as to those who are employed in those places. I greatly regret the fact that although the citizens advice bureau in Stoke-on-Trent, where I know a little about the situation, is able to give advice, it is not able to represent people at employment tribunals. I recognise that there are two sides to the issue. I would be very pleased if people were more knowledgeable, had better access to information and could better exercise their employment rights.

Philip Hammond: The hon. Lady seems to hanker after less formal proceedings in employment tribunals. Does she therefore think that the Government should have awaited the outcome of the Leggatt review on tribunals before introducing changes to the employment tribunal regime?

Joan Walley: That is a very interesting question, and, in the interests of ensuring joined-up government, it might have been worth awaiting the long-term results of action taken by the Lord Chancellor's Department and the Department of Trade and Industry. The real world, however, does not work quite like that. It is critical that the Government should act as they have done whenever an opportunity and slot to legislate comes along, and especially when there are injustices that need to be addressed, women are waiting for paid maternity leave, and we want to introduce paternity leave. The Government have made their necessary proposals. They may need to be reviewed in the fullness of time, but if they are, I hope that it is done sensibly.
	I also ask Ministers to consider the location of employment tribunals. In my constituency, employees and employers who become involved in an employment tribunal have to go to Shrewsbury. I cannot think of any other reason—although I am sure that hon. Members from Shrewsbury could give me one—why anyone in my area would go to Shrewsbury. This morning I checked the bus timetables, and they showed that one would have to catch a 6.50 am bus to arrive at 8.45 am in Shrewsbury. The next bus would arrive too late for the start of the tribunal. Moreover, a train journey to Shrewsbury requires a change at Crewe and would take longer than a train journey to Birmingham. Incidentally, a bus journey from Stoke-on-Trent takes longer to Shrewsbury than to London.
	I simply wonder whether the location of many employment tribunals is no longer convenient, and whether we should consider siting them better in many constituencies so that we can better meet people's needs. That would do much to improve knowledge about the work of employment tribunals and how they are used.
	I have consistently supported proposals to assist the resolution of disputes in the workplace. I welcome the principle of statutory disciplinary and grievance procedures, because that would encourage employers to adhere to appropriate disciplinary procedures and employees to follow that grievance procedure. It is right that a dismissal will automatically be found to be unfair if the statutory disciplinary procedure has not been followed.
	The problem with the statutory disciplinary procedure is that it is simply an empty shell. It contains no requirement for the employer to hold a fair hearing, other than to set out allegations and hold a meeting. There is no requirement to investigate the allegation, no reference to questioning of witnesses and no mention of rights of representation. Given the fact that ACAS has a well thought out code of practice that employers have been encouraged to follow, perhaps we could reconsider those two different sets of recommended disciplinary procedures during the Bill's passage, and try to satisfy some of the wishes expressed by Opposition Members for more simplified regulation of business.

Betty Williams: On that point and on the question of review, does my hon. Friend agree that a review of the Employment Relations Act 1999 is necessary, especially in view of the experiences of some of my constituents employed at the Friction Dynamics factory in north-west Wales? They were sacked by a ruthless employer, a move that has involved them in a long-drawn-out appeal before an employment tribunal.

Joan Walley: Yes, I agree with my hon. Friend, and if that review were to take place, I hope that she would have an opportunity to ensure that the views of her constituents were represented.
	The second problem with the statutory disciplinary procedure is that it incorporates a modified procedure to deal with summary dismissal for gross misconduct. That procedure contains only two steps and differs from the standard procedure in that no provision is made for any kind of hearing. Has it been assumed that summary dismissal is synonymous with instant dismissal? I was under the impression that summary dismissal referred to dismissal without notice. When the Minister replies to the debate, I would be grateful if he would address that point.
	Another important issue is the failure of employers to provide written statements of terms and conditions. From the cases in my constituency, I know that that is one of the major stumbling blocks to the resolution of disputes in the workplace. Current legislation requires employers to issue written statements in the first two months of employment. In view of the briefing that I—and many other hon. Members—have received from the National Association of Citizens Advice Bureaux, perhaps we could find a way to ensure that employers issue those written documents when required, because the Bill contains no right to make a free-standing complaint to a tribunal about the absence of a written statement. I do not want to make more work or create more bureaucracy, but it is important that both employer and employee have a written statement. If it is not issued, the solution may be for people to request it once they know more about their rights. I hope that the changes introduced will achieve that, but it will not happen in the prevailing culture.
	Reference has been made to clause 45. I welcome many of the Bill's provisions and I was interested in the comments by the hon. Member for Maldon and East Chelmsford about gold plating. I congratulate my right hon. Friend the Secretary of State on the gold plating in respect of fixed-term workers. I am pleased that the Bill will grant the Secretary of State the power to make regulations that will give effect to the directive on fixed-term work. I am especially pleased that the regulations will go further than the directive and prevent pay and pension discrimination against fixed-term employees. I give praise where praise is due.
	I am slightly disappointed, however, that the proposed regulations will apply to the narrow definition of "employee", rather than the broader category of "worker" and I support the intervention made earlier by my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on that issue. The regulations affecting part-time workers apply to the broader category of workers, and the directive that gives effect to part-time work regulations and the directive that gives effect to the fixed-term work regulations contain identical definitions of "worker". On logical and, perhaps, on legal grounds, it is unsatisfactory for the proposed fixed-term work regulations to have restricted application. That would give rise to uncertainty and confusion for workers and employers and I wonder whether the Secretary of State's forthcoming review might be completed in time to go hand in hand with the Bill.
	On the extension of employment protection rights, it is the workers who do not fall under the legislative definition of employee, such as casual workers, agency workers, home workers and contract workers, who are among the most vulnerable members of our work force. I see from cases in my constituency surgery that those workers are a fast growing category, but they have the least protection in terms of employment rights. The broader category of workers is protected under the working time regulations, the national minimum wage legislation, the sex, race and disability legislation, the part-time workers regulations and by the right to be accompanied at disciplinary and grievance procedures and hearings. However, key rights restricted to the narrow definition of employees include the right to claim unfair dismissal, the right to claim a redundancy payment and the right to take maternity leave. It is wrong that some workers should be denied those rights at work simply because of the category into which they fall. I hope that the Government will consider the extension of employment protection rights to all workers to reduce some of the unfairness inherent in the system.
	UCATT recently carried out a survey of bogus self-employed workers. Perhaps this is the time to consider their situation and to consider in further detail the concerns of some in the public sector about a twin-track system of employment. Unison has made proposals for a fair wages clause, in relation to the TUPE regulations, and I hope that the Government will consider including such provision.
	I am grateful for the chance to contribute to the debate. More and more people come to my surgery who are experiencing real problems at work and the Bill will make some real and significant improvements. It will be good for British business and the people who work in British business. I look forward to further detailed discussion during the Bill's progress.

Vincent Cable: In general, the Liberal Democrats broadly support the Bill and, in particular, the key elements of tribunal reform and family-friendly employment are a step forward. However, when I talk to the key representative organisations, whether on the business or on the union side, it is obvious that they are unhappy about some aspects of the Bill. My assessment is that unions' unhappiness about the clauses that relate to them roughly cancels out the unhappiness felt by the Engineering Employers Federation about the provisions that relate to them. In that sense the Bill is well balanced, but there is clearly work to be done in Standing Committee, where detailed legislative points will have to be taken into account.
	Employers have made two general comments about the Bill. First, they have said that there is no case at present for major, far-reaching labour legislation. One reason for that is that labour relations in this country are generally very good these days. Even though low levels of unemployment could create a lot of wage pressure, that pressure has not manifested itself. In addition, there are very few stoppages at present—about one fifth as many as in the 1970s and 1980s. There are various reasons for that, one of them being a structural move towards small firms and services. Also, one has to acknowledge that, to an extent, the labour reforms introduced by the previous Conservative Government have made a contribution, and the unions now have a much more constructive approach towards working in a positive way with employers. The cultural change in the trade union movement has to be acknowledged.
	The second general point is that employers are concerned about over-regulation. I share some of the worries expressed by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), but he came dangerously close to arguing against regulation, as such. Regulation is not the problem: the problem is the way in which it is carried through.
	The classic example of bad regulation in employment matters is the working time directive. It is bad because neither employers nor trade unions were consulted when the regulatory detail was being drafted. In effect, the parliamentary draftsmen and officials at the Department of Trade and Industry were let loose, and produced an enormously convoluted set of detailed regulation running to some 80 pages. If they had talked to their partners on both sides of industry they would have learned, among other things, that one page of instructions had sufficed in Holland. That was gold plating on an epic scale, and the experience has left behind a lot of ill will.
	I regret that the Secretary of State has left the Chamber, as it appears that the Government want to counter some of the ill will generated by over-complex regulation by making somewhat hamfisted pro-business initiatives. The most recent was the announcement that senior business people would be seconded to operational jobs in the Department of Trade and Industry.
	That initiative is appallingly badly thought out and dangerous, for many reasons. For example, if I were a trade unionist I should be extremely alarmed that an employer with a dubious labour relations record could in future draft employment legislation.

David Chaytor: Does not the hon. Gentleman accept that that initiative establishes the interesting precedent that, in the future, leading trade unionists might also be seconded to the Department?

Vincent Cable: To be frank, I do not think that that would be any better. What is required is an element of neutrality and detachment in the people who give advice and prepare legislation. The initiative sets a very bad precedent. I have worked in a big company, and I know that people from big companies tend to have no background in small business and do not understand its concerns. They will always be suspected of representing their companies' sectional interests. The initiative is a very bad way to counter the ill will generated by inappropriate legislation.
	I turn now to specific elements of the Bill. The core provisions of its family-friendly sections—the new paternity rights, and extended maternity leave and pay—seem very sensible, both in terms of their benefits for families and in terms of the economy.
	The modern British economy faces the potentially long-term problem of increasing the supply of skilled and unskilled workers. Much of that supply will have to come from older workers who have retired prematurely, and from women who, traditionally, have taken long and often involuntary absences from employment. Any provisions such as maternity and paternity rights that make it more comfortable for women to return to work should be welcomed and encouraged, as long as they are properly balanced.
	We must get away from the old-fashioned attitude to parental leave. That attitude was captured in the story—I am sure that it is apocryphal—of the naval rating who asked his senior officer for a little time off to attend the birth of his child. The rating was told that he had totally misunderstood his duties as a naval officer, and that they meant that he had to be present when the keel was laid but not when the ship was launched. Too many employers have applied the moral of that story to the families of employees for too long.
	Some of the more critical comments made about the Bill have captured the practical problems that it poses. Some small employers—and not through bloody- mindedness or obscurantist attitudes—have genuine difficulty in accommodating absence. I welcome the small provision in the Bill that requires that the paternity leave be taken in a block, with the result that it is less disruptive. I hope that consideration will also be given to ways of ensuring that people taking such leave signal their intent well in advance, so as to give employers adequate notice. In small ways such as that, the provisions in the Bill can be made much more palatable to employers.
	I was a little confused about what the Secretary of State said about flexible working. The logic beginning to emerge from the commission that the right hon. Lady established was that workers should not merely have the right to ask for flexible working, but that they should have the right to have a request considered sympathetically. In addition, it suggests that employers should be required to make a commercial case if they have to refuse a request for leave. If that commercial case were not made adequately, an employee would have the right to go to a tribunal.
	If I heard the Secretary of State correctly, she did not confirm that such provisions would appear in the Bill. She seemed to say that there would be a probationary period of indefinite length before the Government took action, as she put it. I hope that the Minister for Employment and the Regions, when he replies to the debate, will say whether the more balanced approach that I have outlined, and which includes the right to a tribunal hearing, will be incorporated in the Bill, or whether it will merely be an eventual recourse.
	The Minister is nodding, which suggests that that balanced approach will be contained in the Bill. If that is so, I welcome it.
	The third element in the Bill that relates to family-friendliness but which is distinctly unfriendly to families is clause 47. The hon. Member for Maldon and East Chelmsford rightly said that the Bill is being used to introduce bits of welfare reform that are completely unrelated to its overall logic. I will go further, and say that the provisions are not only inappropriate but extremely reactionary. I suspect that the Secretary of State for Work and Pensions is trying to get another Secretary of State's fingerprints on the weapon that he is using to attack the rights of disabled people.
	The clause will mean that, in future, the partners of disabled people in receipt of a variety of disability benefits will be required to submit to the work test. If they fail that test, as currently defined, benefit sanctions will ensue.
	That worries us deeply, because there is no evidence that the process will encourage disabled people's partners to work. However, there is a lot of evidence to suggest that many such partners, although they are not being paid, are working, in the sense that they are carers. Driving those people into work would be inhumane in some cases, and enormously costly to the state, which would have to fulfil the caring responsibilities.
	Those familiar with the way in which the present incapacity benefit tests work know that some cases of real hardship are being generated. That is especially true for people with degenerative illnesses such as early Alzheimer's disease or Parkinson's disease, motor neurone disease or multiple sclerosis. In such cases, the early diagnosis of disablement does not entitle people to the higher levels of incapacity benefit.
	There is a danger that many of the people who care for sufferers of such diseases will be pushed out to work, at a time that will be exactly wrong in terms of their caring obligations. I am worried that the good that the Government are doing with the more progressive family-friendly elements in the Bill will be countered by that extremely retrograde and damaging provision in clause 47. We shall vehemently oppose those provisions.

Mark Prisk: Does the hon. Gentleman agree that the clause is deeply intrusive with regard to the relationship of a couple, as defined in the Bill?

Vincent Cable: The hon. Gentleman is absolutely right. We are no longer concerned about the work test for disabled people but about the way in which they balance their family relationships and caring responsibilities. I hope that the hon. Gentleman will support our objection to the clause when it is debated.
	There has been a substantial escalation in the number of tribunal referrals—something like 25 per cent. in the past year and 300 per cent. in the past decade—along with substantial associated costs. I have read some of the analytical work on tribunals, and it is clear that this is not simply a question of people becoming more litigious or trade unions becoming more aggressive.
	There are good reasons why more references are made to tribunals. For example, there are more women in the work force, and, as many of their problems are not addressed through existing procedures, they have to go to tribunals. Many tribunal references relate to redundancies in manufacturing industry which have been taking place on a large scale. A growing proportion of people work in small enterprises which often do not have these internal dispute settlement procedures, hence the need for tribunal references. So there are good reasons for this rising curve of tribunal activity—it is not necessarily a matter of blame.
	The Government are right to say that there must be obligatory use of an internal dispute settlement procedure. There is consensus on that among employers and trade unions, and it would be a big step forward. I think that the Government are also right to have backed down on their proposal to impose fees for using a tribunal. That could have penalised many low-income people, particularly those making repeat appearances. I am glad that the Government have listened to the criticisms of that proposal.
	There are problems regarding tribunals which we will explore in Committee. However, I will refer to some of the queries that have been raised with me. The legislation seems to contain a new screening procedure. At first sight, it seems sensible that cases do not automatically go through to a full tribunal hearing but have to be screened. It seems sensible to get rid of vexatious litigants. However, as I understand it, there is already a requirement to place a deposit and many people who do so subsequently win their tribunal hearings. It would be good to hear evidence from the Government about that experience before they press ahead with a new and more complicated procedure.
	The other doubts that I have about this, which the hon. Member for Stoke-on-Trent, North (Ms Walley) and others have also mentioned, relate to cost orders. It seems sensible to tell people that there must be discipline and they must take account of the cost. However, it is all too easy to understand how someone in a dispute, particularly involving a large company, would put on the balance sheet the cost of half a day with the director of human resources, who is paid £100,000 a year, and a couple of QCs. The cost could quickly become astronomical, prohibitive and inequitable. That aspect of costings needs careful consideration.
	It was clear from the consultations I have had on the Bill that there is a lot of unhappiness on the business side about the compulsion element of learning representation. Businesses are concerned that they are being asked to pay for—not simply to accept—learning representatives, some of whom might use their position to take an aggressive approach to industrial relations and destabilise them. That is the argument. My view is that that concern is probably overstated, one reason being that these rights will apply only in unionised companies, many of which will not have such learning representation. On balance, the provisions are probably about right, but the Government will have to deal with employers' concerns.
	To conclude, I think that the Bill is balanced and represents a step forward. We shall support it. However, I agree with the amendment in one respect. We must be careful that secondary legislation does not produce a plethora of red tape such as that which we have seen all too frequently in the past.

Frank Doran: I start by declaring an interest. I am a member of the GMB and secretary of the GMB parliamentary group.
	I have another interest to declare. We have heard much from Opposition Members about the problems of business, particularly small business. I used to run a small business when I practised as a solicitor; I employed about 10 people before I came to this House first in 1987. I agree to some extent about the problems of small businesses and the difficulties caused by any change in legislation. People in business want stability and certainty. Even good regulations made me unhappy because I had to spend some time thinking about how to manage their implementation. However, we must balance that against the interests of employees. The Bill contains some important provisions, which I welcome.

Mark Prisk: Does the hon. Gentleman recognise that his qualification as a solicitor made him uniquely qualified to deal with many such proposals? Many people who go into business, whether they run a local post office or a corner shop, are not as qualified and therefore will struggle with the proposals.

Frank Doran: I have practical experience of the fact that the gardener's garden is usually the untidiest one in the street. Somebody in the office looked after those matters for me.
	My experience is relevant, but I want to concentrate on two aspects of the Bill with which I am less comfortable: both have been raised by my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) and, in his intervention on the Secretary of State, by my hon. Friend the Member for Manchester, Central (Mr. Lloyd).
	I am concerned about the provisions that will lead to greater formalisation of the employment tribunal system. I worked for 10 years as a solicitor and was involved in many tribunal cases, mostly under the provisions of the Trade Union and Labour Relations Act 1974. I know that the system has changed and that there have been modifications, but the basic principles have not changed.
	The 1974 Act was about accessibility. It allowed workers to present cases relatively informally and ensured that workplace grievances had an outlet. It did not change the basic relationship between an employer and an employee. In the absence of clear statutory guidance, courts and tribunals interpreted that relationship in the context of the common law, which militated against the interests of employees. The common law provisions, with which I am sure most people are familiar, were fairly straightforward. The employer had the right to hire and the right to fire—full stop. There was not a lot in between. The employment tribunal system introduced under the 1974 Act was extremely important as it gave rights to employees for the first time.
	I had a glorious start in the old industrial tribunal system. In my very first case, I represented an employer. When I look back at the case now, as a Labour MP, I take a bit of pride in it. The tribunal decided to make an award of compensation against the employer, and at that time it was the largest ever made against an employer by a tribunal in Scotland: no class betrayal there, then.
	I acted for employees as well as employers. I represented many trade unions. As most Members know, trade union officers tend to conduct their own industrial tribunal cases, but for their more complex ones they employed legal advisers. I was privileged to represent trade unions in a number of cases.

Philip Hammond: Given the hon. Gentleman's background and experience in this field, how does he feel about the proposals to make third-party representatives personally liable for awards of costs when they are remunerated, as in the case of a solicitor, but not when they are unremunerated, as in the case of a union representative?

Frank Doran: If the hon. Gentleman wants an honest answer, I would have to say that it is not such a good idea and will be difficult to implement in practice.
	When I represented employees—in many cases, former employees—I experienced some difficulties. Access was relatively easy for the employee. There was no legal aid scheme for the tribunal hearing, although at that time most solicitors who were prepared to engage in such work on behalf of employees were able to make fairly constructive use of the legal advice and assistance scheme. The schemes in Scotland and in England were slightly different, but the difference was not so great as to be relevant.
	The case could be prepared under the legal advice scheme, usually with extensions of the basic limit. Representation was on a no-win, no-fee basis, which put considerable pressure on the agent to try to find a settlement. I certainly felt such pressure when acting for employees. ACAS—the Advisory, Conciliation and Arbitration Service—was involved, and we tried to negotiate in many cases and were usually successful.
	It is wrong to proceed on the basis that the fault always lies with the employee. In my 10 years of practice, I handled many cases in which employers refused to negotiate—partly because they were that kind of employer, but partly because their legal advice suggested that they should not settle. In many cases, employers did not come across with an offer until the eve of the tribunal. Many people might suggest that they did so because they had realised that the legal costs were ticking away, but usually offers had been made and employers had refused to accept them.
	My only industrial tribunal case that resulted in the award of expenses against anyone involved an employer in exactly that situation. That fact is important. I was concerned when I read the consultation document—"Routes to resolution: improving dispute resolution in Britain"—published earlier this year, because its language suggests that employees are the problem.
	I was also concerned about the report's use of the word "litigation". Lawyers have taken over the industrial tribunal, mainly because employers have become so defensive and have brought them in. It is not unusual to go into an industrial tribunal and see a row of QCs, not because they are necessary or because the cases are of such legal complexity, but because employers have decided that they or the business require that level of advice. Any push that the Government give towards increasing the degree of formality in the Bill will cause serious problems for the tribunal system. It will have to adjust to the participation of many more lawyers and to a new ethos.
	The current ethos is not unhelpful to the unrepresented applicant. I have been on the other side of a tribunal from an unrepresented applicant and, in my experience, chairmen bend over backwards to help such people, ensuring that, even when they do not understand the legal complexities, they receive as much help as necessary. I have seen union officers helped in the same way.
	I was consulted recently by a woman—she has asked me not to give her name—who had cause to take her employer, a public body, to an industrial tribunal. She decided that, as the public body was employing solicitors and a QC, she, too, needed legal representation. For a three-week tribunal hearing, she received a legal bill for £42,000. That is a recent case. She was fortunate in that she could afford to pay that amount, although it has taken most of her savings, but if that is where the industrial tribunal system is heading, the ethos that was introduced and practised after the 1974 Act will disappear.
	The Law Society of England's briefing on the Bill states:
	"In our view the reforms in the Bill will increase complexity and make it less likely that employment tribunals could ever return to the simplicity envisaged by Leggatt."
	It is instructive that the Law Society makes such comments. Many of its members who make money from industrial tribunals will be happy with those remarks, which should be welcomed as an honest assessment.
	Colleagues have mentioned the Leggatt report. I find it difficult to understand why we cannot wait for the report before implementing legislation, although I appreciate the difficulties of the parliamentary timetable. I accept the point made by my hon. Friend the Member for Stoke-on-Trent, North about the practicalities of government, but it would be helpful if the Minister could assure us that, if the Leggatt report—which will be issued before the conclusion of the Bill's passage—makes specific recommendations about the employment tribunal system and on the increased formality and greater legalisation of that system, he will find time to consider how such recommendations might be implemented. The Secretary of State has already warned us that we might be asked to accept several amendments, so it would be helpful if we could have some assurance about the implementation of the Leggatt recommendations.

Mark Francois: The hon. Gentleman touches on an important point. Does he agree that if one of the original intentions of the industrial tribunal system was to protect employees, there is now—especially given what he says—a real danger that the system will become so complex and so expensive that it could have the opposite effect?

Frank Doran: The hon. Gentleman makes a fair point, but the system is already complex. Last night, I spent some time in the Library trying to read through some industrial relations cases; the system is extremely complex and is difficult for the layman to understand. The key is the removal of barriers to access. Employers will not welcome that, but the importance of a safety valve for grievances in the workplace cannot be underestimated.
	Another of my concerns has been raised by my hon. Friends the Member for Stoke-on-Trent, North and for Manchester, Central: the definition of worker and employee. That may seem a pedantic point and not one that should detain us, but that is not the case. Definition of the individuals who will benefit from the legislation is fundamental to it.
	I want to take the House back to the publication of the "Fairness at work" White Paper, which introduced some basic principles and set out the way in which the Government intended to legislate. I was fortunate to serve as the Parliamentary Private Secretary to the then Minister of State, Department of Trade and Industry and, because of my legal background, was involved in many of the policy discussions and preparations. I sat in on the presentation made by the TUC and the CBI to the then Secretary of State.
	Before the publication of the White Paper, the Government had, in effect, said to the unions and the CBI: "These are the parameters, go off and sort out what you can agree on, what you don't agree on but think you can negotiate on, and what you positively can't agree on. Then come back to us and we will proceed." The hon. Member for Twickenham (Dr. Cable) recommended the same process of: consultation between both sides of industry.
	At the presentation, everyone in the room was taken aback at the degree to which the CBI and the TUC were able to find agreement. That was an important occasion: for both sides of industry to move forward in that way was a landmark in industrial relations. That was recognised in the White Paper.
	Paragraph 1.9 of the White Paper set out the three main elements of the framework that the Government proposed for industrial relations. The first was
	"provision for the basic fair treatment of employees. Unless minimum rights are established, effective relationships in companies cannot prosper. The White Paper establishes new ground rules for fair treatment, allowing employees to form effective relationships with employers—including new rights which recognise the changing nature of work. People must not be deterred from contributing to competitiveness through flexible working arrangements."
	What was recognised in the White Paper and what the Government implemented in subsequent legislation was the principle that the work force needed to be flexible to compete in the modern age and that business sought that flexibility, but that there had to be a basic level of minimum standards in the workplace. One of those basic minimum standards was the need to ensure that legal devices could not be used to exclude workers from the benefits of the legislation that was subsequently implemented.
	One of the most fundamental ways in which that was done was to get away from the old common-law definitions of employer and employee. The concept of "a worker" was introduced under the National Minimum Wage Act 1998, and the categories of worker to whom the Act would extend were clearly defined. At a stroke, all the legal devices that had been created by employers—home working, agency working, part-time working, casual working—came within the ambit of the minimum wage legislation. Those devices were not excluded; employers could not use them to argue that their workers were not entitled to the minimum wage.
	That definition of the term "worker", adjusted for various purposes, was applied to other legislation—the Employment Relations Act 1999 and regulations on working time—introduced mostly because of European social chapter obligations. The definition has continued and it represents the fundamental protection for workers. I am deeply concerned that the Bill contains a different definition of the persons to whom it will apply.
	I am not sure whether I have got the numbering right—it is so complicated—but under clause 2 and proposed new section 171ZJ to the Social Security Contributions and Benefits Act 1992, employees are described as those
	"gainfully employed in Great Britain either under a contract of service or in an office (including elective office)"—
	so it will apply to us as Members of Parliament—
	"with emoluments chargeable to income tax under Schedule E".
	Tribunals and courts will once again be encouraged to apply the Bill to a much more narrowly defined group of people. That will open the door to unscrupulous employers to extend the use of home workers, agency workers and so on.

Philip Hammond: The hon. Gentleman has twice implied that unscrupulous employers seek to define workers other than as employees. Will he consider the fact that the national health service is probably the largest employer of agency workers, who are not employees, in this country?

Frank Doran: The NHS is a good employer that recognises its unions, regularly negotiates terms and conditions and ensures that agency employees have minimum standards. That is crucial, but many employers will not operate in that way. All those various categories were created, on the basis of legal advice, to avoid giving workers the full benefit of the legislation.

Tony Lloyd: Does my hon. Friend agree that this is an important debate because its thrust is not to say that different employment structures are illegitimate, but to offer legitimate protection to those who are not brought within the ambit of the law? That is the implication of my hon. Friend's remarks, but I am rather worried about the Opposition's intentions.

Frank Doran: I agree entirely with my hon. Friend; we are as one on that. It is important that we get back to basic principles. That is why I referred to "Fairness at work", which contains fundamental principles; my worry is that we shall move away from them under the Bill. I welcome the fact that the Secretary of State said that there would be a review, but my worry is that the Bill's reintroduction of the term "employee" will lead some people to pre-empt the decision that she makes in the review.
	We certainly do not want to introduce the possibility that the fundamental protections for workers that we have introduced under the National Minimum Wage Act 1998 and the Employment Relations Act 1999 could be weakened. There are many good things in the Bill. I have raised two issues that need to be seriously addressed by the Government, but, of course, I support the Bill in principle.

Mark Prisk: At the beginning of this debate, the Secretary of State said that the Bill is friendly to families. It is true to say that the Bill sets out a range of improved maternity rights, new paternity rights and rights for adoptive parents. Like many of my Opposition colleagues, I certainly welcome any acknowledgement of the role of fathers. Over the years, bolstering and supporting the role of fathers has been neglected, and there has been an understandable focus on motherhood. It is important, however, that we try to encourage fatherhood wherever we can, through policies and positive role models. I welcome the acknowledgment of that fact in the Bill.
	A further point is recognition of the crucial role of single fathers. Very often, when we talk about single parents, we assume that we are talking about single mothers, so it is important that we recognise the role of single fathers. I want to ensure that they are not overlooked in any way. I acknowledge the importance of adoptive families and the fact that they will be included in the legislation. It is sadly still the case that, even now, too few people are willing to come forward as adoptive parents. Anything that can be done to promote adoptive parents is important, and I commend the recognition of that fact in the Bill.
	However, the Bill is distinctly unfriendly to a very large number of families. The hon. Member for Twickenham (Dr. Cable), who is not in his place, has already mentioned the intrusive nature of clause 47, with regard to families who have disabled members. Although I support his view, there is another very important and large group of families to whom the Bill is rather negative. I am referring to the 4 million self-employed families, who work long hours each week and try to bring up their children. Those families often live and work in the same place and find that, to comply with many of the Government's regulations, they have to work right through their weekends or evenings, so they are not able to spend time with their children.
	Indeed, as my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale) said, most small businesses now expect to spend 48 hours—five normal working days—each month trying to keep up with the raft of proposed regulations. That involves days lost at weekends and evenings lost with children—a very important matter for those families. I suspect that hon. Members on both sides of the House will know the families to whom I refer—the husband and wife who run the local post office; the father and daughter on the farm; the two brothers who may provide a local plumbing or decorating service; or the local family butchers. Many of those businesses have been handed down from one generation to the next.
	My father set up and ran his own business, so I know all too well that, no matter what age those involved may be, they are always involved in the success or trials of the business. Thus, the nature of work and family is intertwined in every self-employed home. Those families—the self- employed, the small business proprietor—represent not only the hard work and enterprise that the Government are trying to promote, but the kind of close family relationships that we are all keen to support. It is therefore with great sadness that I have to say that many of the Bill's proposals represent an unwelcome and unhelpful burden for the self-employed and small businesses.
	The House will know that, even before the Bill's provisions were outlined family businesses already had to cope with a raft of regulations affecting the employment of staff in a variety of ways. In many senses, small businesses are now not only unpaid tax collectors, but unpaid benefit officers.
	I suspect that those who do not run a business or have no direct experience of doing so will assume that the only thing with which small businesses need to concern themselves is compliance with regulations. I wish that were true. In reality, small businesses are required to administer many of the regulations. For example, the stakeholder pension scheme costs small businesses £15 million per annum; the working families tax credit costs them £105 million every year to administer; and the student loan repayment schemes costs them £210 million per annum. The national minimum wage costs £330 million, and that does not include the money that goes into the staff's pockets; it is simply the administrative costs that fall on small businesses. We will now have the cost of administering the new regulations set out in the Bill.

Kevan Jones: The hon. Gentleman says that the minimum wage is a burden on small businesses. Is the Conservative party now opposed to the national minimum wage?

Mark Prisk: If the hon. Gentleman had listened, he would have realised that my point was about the administrative costs involved. When the Government put forward apparently generous social programmes, they often fail to mention the fact that they do not administer them. The burden of administration falls on small businesses. That is the basis of my criticism.

Tony Lloyd: This is a fascinating little lecture. The hon. Gentleman has used the minimum wage as an example of the burden of regulation, but my hon. Friend the Member for North Durham (Mr. Jones) was right to suggest that the Opposition now support it. What is the cost to an employer of checking the present rate of the minimum wage and paying it?

Mark Prisk: The key point with the minimum wage is that the administration of regulations involves not just the process of putting systems in place, but proprietors' time in ensuring that they comply with them. That is the challenge, and I say that as someone who has had the opportunity to run his own business.
	The Government's figures for the Bill say that the cost to business will be £369 million in the first year alone. In years two, three, four and for ever after, the costs will be £272 million each year. If that were not enough, the Government have admitted that small businesses will again disproportionately have to bear the brunt of the proposals. [Interruption.] I hope that the Minister for Employment and the Regions is listening.

Ian McCartney: My hon. Friend always listens.

Mark Prisk: It is nice to know that.
	Earlier today, the Chancellor said that he intended at some stage to recognise the costs of the working families tax credit on small firms. I welcome that small step, even though I had hoped that he would recognise those costs today. Sadly, he has not. However, given that a precedent has been set, will the Minister for Employment and the Regions advise the House whether he proposes to help small family firms with the cost of administering the proposals in this Bill? I would welcome his comments on that.
	Some will say that the proposals in the Bill are driven in part by what comes from the European Union and the social chapter regulations—I think here particularly of the fixed-term contract provisions in clause 45. However, if the Government are simply following EU requests, why have they chosen specifically to include pay and pensions in the terms of the Bill? My hon. Friend the Member for Maldon and East Chelmsford said that pay and pensions requirements are not included in the directive, but they have been added to the Bill. Such gold plating of European legislation is very unwelcome for the simple reason that it puts United Kingdom businesses at a disadvantage. That should concern all Members.
	My worry with these over-prescriptive measures is that, in many different ways, they will put our businesses, large and small, at a disadvantage. For the majority of people who work for decent, small, local family firms, they are an unwelcome and unnecessary intrusion into the good working relationship between employer and employee. Heavy-handed Government interference can only ever be counterproductive in the workplace.
	The Bill is certainly right to acknowledge the difficulties of balancing work and family life. However, it has not been drawn up with the good of self-employed families in mind. For those 4 million households, the regulations will simply bring additional costs that they can ill afford. The red tape created by the regulations will rob people of many hours that could be better spent with their families or making the business more successful. These measures will also make those who work for small businesses—they currently represent nearly 40 per cent. of all employees in the private sector—more expensive to employ.
	For all those reasons, the Bill will hinder some families as much as it will help others. It will deter many local firms from creating the jobs that all families need and, in making family firms pay to run the schemes, the Government are setting self-employed families against their staff. That is why I specifically ask the Minister to give serious consideration to excluding the smallest family businesses from the burdens that the Bill represents. Give them a chance to compete and families the chance to get together. I appreciate the intention behind the Bill but, when we talk about family-friendly policies, we must consider not just those in salaried work but the 4 million self-employed families who play such an invaluable role in local communities and in creating jobs in all our constituencies.

Tony Lloyd: In the light of earlier comments, I should declare my interests. I am a member of the GMB union and the chairman of the trade union group of Labour MPs. I say that with considerable pride, because trade unionism is a staple feature of modern Britain. It is widely accepted that the trade unions play an invaluable role in the social partnership that the Government have sought to build.
	The debate so far has been marked by the views of Conservative Members, who have relapsed into an oldspeak that describes a world that does not exist. We heard enough of that when they were in government. However, ramblings such as those of the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) are now confined to the hypothetical. They will not be in government for a considerable time.
	The high noon of the speech of the hon. Member for Maldon and East Chelmsford occurred when he began to whip up an anti-parent rhetoric. Perhaps the Tories see their future as an anti-parent party representing those workers without children who deeply resent the rights given to those with children. That would be dangerous if it were not so silly.
	The Bill will extend welcome rights to people with families and will give people in the workplace the opportunity to consider more flexible working arrangements. Working relationships that are in the interests of employees and their families are probably in the interests of employers as well as society more generally.

Philip Hammond: Does the hon. Gentleman accept that this Bill, which will greatly improve the position of fathers and mothers in the workplace, involves the making of choices? Other employees in the same workplace will also be carers—although not of children—and they will not be advantaged in the same way.

Tony Lloyd: If that is the general thrust of the Opposition's argument, it might find some sympathy on the Labour Benches, but there is a world of difference between that and trying to whip up anti-parent rhetoric, which seemed to be the intent of the hon. Member for Maldon and East Chelmsford.
	We are extending legitimate rights based on what we now accept as understandable demands. They are not necessarily requested by people who will benefit from them now. Those who did not have the facilities available when they were parents are also interested in providing them. The Government will receive a strong welcome for the proposals from Labour Members, the country as a whole and, perhaps, some Members on the Opposition Front Bench.
	We heard, grudging comments about red tape from Opposition Members who suggested that the Government are imposing a burden on business, but it is nothing of the kind. People will welcome the extension of maternity pay and maternity leave, and they will strongly welcome the introduction of proper paternity pay and paternity leave. In fairness, the hon. Member for Hertford and Stortford (Mr. Prisk) said that he welcomed the extension of leave for adoptive parents. The Government are making strong and sensible moves.

Mark Prisk: What would the hon. Gentleman say to a newsagent in my constituency, Mrs. Moy, who suddenly found that the costs of her part-time staff doubled? She has no means of recouping the costs of enforcing employment regulations, because all her prices are fixed. How is she meant to run a business when the regulations add to her burdens? She does not have a legal department or the relevant expertise. She has to deal with the regulations day in, day out.

Madam Deputy Speaker: Order. The hon. Gentleman knows that interventions must be brief.

Tony Lloyd: Unfortunately, Madam Deputy Speaker, I think you interrupted the hon. Gentleman before he made his real point. I cannot say why Mrs. Moy is experiencing those problems, although I advise her to get another MP who would be more succinct in putting her case.
	As well as the provisions for the different types of parental leave, I also strongly welcome the introduction of union learning representatives. That is an important step forward. We know that we do not train enough, or train properly, in the world of work. That has been a feature for many years in Britain and we have to address that fundamental problem. The right of trade unionists to have learning representatives is widely welcomed throughout the world of work, both by employees and by those employers who are rational about the problem, although there are strong arguments on the need for more affirmative action in training.
	The wonderful concept of the gold plating of the fixed-term contract directive is only in the minds of Conservative Members. Most people would accept that it is common justice for people who have different types of employment contracts to be offered equivalent pay and pensions. It is also a sensible thing to do in terms of an efficiently labour market. It prevents the bad employer from using a legal device to undercut the better employer. That has been an issue for a long time, ever since the debate on the wages councils, which Winston Churchill introduced many years ago. We should take the argument seriously. I am pleased with and proud of the Government for recognising that concern in the progress that they have made on the fixed-term contract directive.
	There are, however, some things that I hope we will consider in Committee and during the Bill's proceedings in general, in order to improve it. My hon. Friend the hon. Member for Aberdeen, Central (Mr. Doran) talked at length about the employee/worker split. It is an important consideration that permeates industrial legislation and will exercise the mind of anyone who examines the issues. It was not ignored when the minimum wage was introduced, because we used a wider definition of worker. It is understood that problems emerge if we stick with the narrow definition of employee.
	Three aspects of the Bill use the more restrictive employee definition instead of the worker definition, which I regret. In terms of the implementation of the fixed-term directive, the various types of parental pay and the disciplinary procedures, some rights will not be extended to a significant number of people who are de facto employees even if they are not so defined by the letter of the law. I hope that we will debate those matters in Committee and consider extending employment protection to everyone engaged in productive employment.
	I also hope that we will examine aspects of employment tribunal legislation in Committee. My hon. Friends the Members for Stoke-on-Trent, North (Ms Walley) and for Aberdeen, Central made some telling points about the ways in which we can improve the Bill. In particular, I draw the Minister's attention to charges and costs. I strongly welcome the Government's decision not to proceed with charges, because they would be a disincentive for people to go before the tribunals. It was interesting that the Opposition saw that as a major issue and urged that charges be reconsidered. I hope that they will not pursue that, because we know that charges have a deterrent effect.
	My hon. Friend knows that I did not have the highest opinion of the increased costs that were introduced earlier this year. As the Government managed to slide them through somewhere before the end of the previous Parliament and the beginning of the new Parliament, they were not perhaps properly examined by us. I hope that we will not fall into that trap, with the possibility of adding on costs for employers' time. It is important that we recognise that costs can have a deterrent effect.
	I draw my hon. Friend's attention to a case that I think I have mentioned to him before. Two women, Ms C and Ms D, work together in a company and were both sexually harassed by the managing director. I am sure that the House accepts that workers should be given proper protection against sexual predation by senior staff. They both rejected the managing director's propositions and eventually complained about his behaviour. One of them was sacked for gross misconduct after she arrived late at work one day and the second was also sacked, although it was termed as redundancy. They made claims for sex discrimination with the help of the local law centre.
	The employer's solicitor sent a letter to the law centre threatening costs, explaining that it was likely that substantial sums will be awarded
	"against people who bring claims on the spurious grounds of discrimination, such as we are sure you will alert your client can be up to £50,000."
	The solicitor acting for the employer is wrong about the amount of the cost. However, the same letter threatened to sue the two women for libel and perjury, and they were anxious as a result, which is not an unnatural reaction to intimidation by a solicitor. Indeed, there are questions about the probity of the solicitor's actions. The women's representative at the law centre took the letter up with the employer's solicitor, who said that it was standard practice to nip such cases in the bud. The last I knew, that case was ongoing.
	My point is that there was a clear attempt by a solicitor to intimidate and put people off gaining access to a tribunal. We should deplore that and recognise that costs can and are being used to prevent access. I hope that my hon. Friend will recognise the strong feelings on the Labour Benches about the possible deterrent effect of costs.

Philip Hammond: I understand what the hon. Gentleman says, and no one would support such conduct by a solicitor. However, will he recognise that many employers face vexatious and trivial claims, which is exactly what the changes in the Bill are intended to tackle? Employers will incur substantial management time costs in dealing with them and it is only reasonable that they should have an opportunity to recover costs if claims are found to be vexatious or trivial.

Tony Lloyd: There has always been provision for tribunals to issue costs against those who bring vexatious or trivial claims. We are talking now about the level of costs and the fact that tribunals will now be able to take into account the time involved. We must understand that there are very few vexatious cases, and there are other mechanisms, such as the pre-tribunal screening process, by which we can begin to tackle them.
	As Members of Parliament, we are all aware of the cranks in our society—those who get a bee in their bonnet and become obsessed—and we should not flood tribunals with such cases. However, we should not be under the illusion that they are the cause of the enormous increase in the number of cases going to tribunals—there are other reasons for that—or we would do no service to the many good employers and employees who resolve difficult issues in tribunals. We need tribunals to determine fair practices in industry.
	I turn now to the wonderfully named Polkey judgment, and the way in which it will be thrown into doubt by the Bill. I understand that the arguments on these matters are technical and detailed, but if we dismiss employers' legitimate need to operate due process, and say that due process is of only marginal use, there is a real danger that we undermine an important principle at a time when we are telling employers that they must introduce proper disciplinary and grievance procedures. If we expect those procedures to be honoured, and not only in the breach, we need to show that honouring them brings employers reward, and dishonouring them might put them in jeopardy.
	As my hon. Friend the Member for Stoke-on-Trent, North pointed out, there are serious concerns that employers may not, for example, even be required to carry out proper investigations into cases of alleged misconduct, and that would be allowed under the reversal of the Polkey principle. It would leave employees open to abuse by employers. I hope that my hon. Friend the Minister will take that issue seriously. It is technical in concept, but very important in the practical impact that it will have on some of the most vulnerable people in the workplace.
	I turn now to provisions that I would like to see in the Bill, or at least in legislation. I asked the Secretary of State whether, if the review of the Employment Relations Act 1999, undertaken by the Prime Minister demonstrated the need for legislative change, she could guarantee that we would see that legislation in the lifetime of this Parliament. Alas, my right hon. Friend forgot to respond to that question, so I hope that the Minister of State, in his winding-up speech, will give that commitment. I notice that the Minister for Pensions, is on the Front Bench. He deserves enormous credit for the present state of employment relations and industrial partnership. He will recall that the need for review was accepted by all parties when the Employment Relations Bill was going through Parliament.
	There is now time for a review, and we already know that some of the events that followed that legislation have been unsatisfactory. I refer in particular to the sacking of 87 people by Friction Dynamex in north-west Wales. It is a scandal that people can be sacked for taking part in a legal strike because that strike lasts for over eight weeks. Such provisions have no place on the statute book, and I hope that the Minister accepts the need to consider that during the passage of the Bill. We might use this opportunity to improve on that legislation, which would do an awful lot to demonstrate this Government's good faith, not only to the trade union movement but to people in the workplace who deserve better. I hope that the Minister will also seriously consider other aspects of employment law where the need for change has already been demonstrated.
	The Bill is already good and offers people in the workplace many new rights and opportunities, including the chance to be part of the social partnership between employer and employee. However, we can improve it in Committee and when it returns to the Floor of the House. I hope that the Minister will listen to the pleas from hon. Members on the Labour Benches but recognise that the views of Opposition Members are totally backward looking. The hon. Member for Runnymede and Weybridge (Mr. Hammond) used the word "dinosaur", and I agree with him that he is one. We should not allow Opposition dinosaurs to bludgeon our Government, who are committed to progress, into looking backwards too. Let us look forward and build on the Bill to develop a better industrial relations climate.

Gregory Barker: Before I commence, I make a small declaration of interest as a modest employer of domestic and child assistance, although I assure Labour Members that I am not in the same league as the hon. Member for St. Helens, South (Mr. Woodward).
	Several organisations representing parents and families have welcomed certain family-friendly measures in the Bill, and so do I. Notable examples include the Equal Opportunities Commission and the citizens advice bureaux. As a Conservative, it is natural for me to support not only certain measures but the principle of family- friendly practices in the workplace. Furthermore, as the father of three young children, the youngest born only earlier this year, I fully understand the pressures under which employees throughout the country frequently find themselves.
	I know the demands of balancing a young family and employment, but ultimately parenthood has to be enjoyed and relished. It is certainly more important than any job, and ultimately it is what we are all here for. As my own father recently reminded me, we should all take time to enjoy and appreciate our young children before they slip through our hands into adulthood while we are not watching. The value of parenthood cannot be overestimated.
	It seems that recent tribunal cases, such as that of PC Chew, who won her case against Avon and Somerset police, and Neil Walkingshaw who, as the Secretary of State mentioned, won the right to care for his six-month-old son, have sent a clear message to employers that wherever possible they must agree to reasonable requests from parents. Improved maternity pay and leave and the introduction of paternity leave should mean that more parents have choices about how to combine their work and family responsibilities. These welcome advances recognise the changing roles of women and men at home and at work.
	In my view, personal choices in balancing a demanding job and a demanding family are ultimately down to the individual, not the state. It is for individuals to prioritise how much time to give to work and their career, and how much to their family. Sacrifices have to be made, and it is a grown-up choice in a grown-up world. Although the intent of the Bill is admirable, the drafting is not. It is likely to backfire on the very people whom it aims to support. The result could be perceived as special treatment leading to a backlash against working parents.
	Workplaces are already becoming more flexible, and we all welcome that. It makes sense, and is widely recognised by businesses, that as parents and employees we have conflicting duties that must be recognised and balanced in the interest of employers and employees. Although the adoption of new best practice is to be welcomed, we must be careful that increasing legislation does not create an intolerable burden on small business, the result of which, particularly in current economic conditions, could be to put many family breadwinners on the dole. The legislation that the House is currently considering will add another layer of administration for good employers and may result in bad employers sticking to the letter of the law, thereby limiting the choice open to working parents.
	Common sense should prevail so that family-friendly policies do not dilute the competitiveness of the British economy and British industry. If we look at a few key facts, we see that the current outlook for the British economy is not good. Figures released by the Office for National Statistics on 21 November show that manufacturing investment has fallen to its lowest level for seven years, at the fastest rate for more than 30 years. The problems are now spreading to the services sector. The Chartered Institute of Purchasing and Supply recently reported that activity in the services sector fell in October at the fastest rate since it launched its survey in October 1996. Unemployment has started to rise for the first time in a decade, and figures released by the Office for National Statistics show that the number of dole claimants increased by nearly 4,500 in October. To choose to load further burdens on business will push many of our smallest firms into the red and possibly into receivership.
	I should like to concentrate briefly on the issue of competitiveness. During the Labour Government's first term, red tape costs increased by £15 billion, according to the British Chambers of Commerce. The £15 billion red tape bill is based on the Government's own regulatory impact assessments—compiled from the BCC's "Burdens Barometer 2"—and does not include the financial cost of the national minimum wage. In the same period, according to the International Institute of Management Development, the United Kingdom fell from ninth to 19th in the world competitiveness league table. Employers have given the Bill a mixed reaction for precisely those reasons; the measure is likely to impose significant extra burdens on business—particularly, as I have said, small business.
	I shall give the House just two examples. The requirement for companies to recognise trade union learning representatives may lead to problems when agreement has not been reached with the employer. Some companies have reported that learning reps provide a useful service, but that needs to be in partnership with employers. When workplace relationships are fragile, imposing learning reps is unlikely to add any value at all to businesses. The inclusion of pay and pensions in comparable employment conditions under the fixed-term work regulations will be complex for business and likely to lead to significant additional administrative burdens. Benefits such as pensions and company cars may be inappropriate for people on short-term contracts but, to ensure equality, employers will be required to calculate and compensate for their relative value.
	The Federation of Small Businesses echoed those sentiments:
	"Our members broadly support family-friendly policies but there is no doubt that parental leave is generous to employees and hard on employers, which can only harm productivity. We are also concerned that over-prescriptive regulations soon become outdated and damage relationships in small firms where most proprietors do their utmost to help in times of emergency."
	As my hon. Friend the Member for East Devon (Mr. Swire) said, the Institute of Directors supported that line. Indeed, Ruth Lea, the head of the IOD policy unit said:
	"Whilst the family friendly policies contained in today's Employment Bill look very attractive, they will undoubtedly increase the regulatory burden on business. I am aware that some people believe we cry wolf, but there is now little doubt that the cumulative increase in the regulatory burden on business over the last four years has been considerable and is beginning to damage business's flexibility and competitiveness. This damage will, we fear, become all too evident as the business climate deteriorates."
	It is admirable that the Government are attempting to help families and working parents, but that should be achieved without hurting employers through over-prescriptive regulations. British business is already under considerable pressure; when it says that enough is enough, why do the Government not listen?
	In conclusion, I greatly welcome measures that seek to improve dispute resolution procedures and promote family-friendly practices in the workplace, but I oppose Second Reading because of the Bill's excessive dependency on secondary legislation and the significant extra burdens that it will impose on British industry, particularly smaller businesses. We all agree with the Bill's principles, but ultimately a balance between best practice and new legislative burdens must be found. The Labour Government have got that balance dreadfully wrong.

Rob Marris: I have already declared an interest as I have links with the Transport and General Workers Union. I should also tell Opposition Members who are keen on such things that I have run small and large businesses and have worked in the public sector as well. My background in this stuff is therefore pretty wide ranging. I welcome many aspects of the Bill, including the provisions on statutory paternity pay and statutory adoption pay; I also welcome the provisions clarifying paternity leave and adoption leave, as well as maternity leave, pay and rights. I welcome the provisions on fixed-term work and equal treatment of fixed-term contract workers; I also welcome the provision on union learning representatives.
	I thought that I would make that preface because often in these debates one goes on to make criticisms of a Bill's drafting and suggest ways in which it might be improved. The Opposition are constantly banging on about red tape and gold plating, but when I asked the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) which regulations he would keep, he would not say, nor would he tell my hon. Friend the Member for Manchester, Central (Mr. Lloyd) which regulations he would get rid of. It is difficult to engage in political debate when all Conservative Members seem to talk about is cumulative effect. The hon. Member for Bexhill and Battle (Mr. Barker) talked about £15 billion of cumulative red-tape and extra costs since 1997; I think that that was the flavour of his remarks. That figure may be right, but we are talking about quality of life. Simply to focus on financial costs is to be like an old-fashioned Stalinist and say, "It is all about material gain; the quality of human life does not come into the equation." Of course it does; increased regulation in many parts of our life is desirable. Regulations and laws are the basis of civilised lives.

Gregory Barker: Does the hon. Gentleman not accept that we all seek a better quality of life for working parents? However, the Bill will impose more regulation, which will put working parents on the dole; that is not something that any of us want to achieve.

Rob Marris: I agree that none of us wants to put anybody on the dole; that is why, under a Labour Government, millions more people are in work than under the Conservative Government. The Bill's provisions are not at all likely to put more people on the dole. The hon. Gentleman and I may disagreebut I do not think that the Bill will do that.
	It is not surprising that there has been a threefold rise in the past 10 years in applications to industrial tribunals, and now employment tribunals; I want to focus on the part of the Bill that deals with that. Arguably, the Conservative Government fostered poor industrial relations during their period in office. Until recently, there was a continuing decline in union membership—happily that has stopped—and a decline in collective action to resolve disputes. A more individualistic approach was adopted; individuals are more educated and aware of their rights, so are more likely to seek to enforce them. We have had more rights, not only under the Conservative Government and, I must acknowledge, under the Disability Discrimination Act 1995, but, in the past four years, under the Labour Government, including considerably more rights for workers. When people have more rights, it is unfortunate that occasionally employers do not respect those rights, so employees have to go to industrial tribunals.
	The thrust of the Bill, which is to encourage employees—sadly, not workers, but that is another debate, which I hope we will have—and employers to resolve disputes in the workplace, and not to bring them into the tribunal arena, is commendable, particularly the disciplinary and dismissal procedure in schedule 2. However, I am concerned that parts of the Bill seek to squeeze people out of their rights at industrial tribunals and their rights to go to those tribunals.
	The nub of the problem that we face when legislating is that in many cases we would like—Opposition Members would certainly like—to simplify legislation. My hon. Friend the Member for Aberdeen, Central (Mr. Doran), who practised as a solicitor before he entered Parliament, mentioned the Trade Union and Labour Relations Act 1974, which arose from the Donovan report of 1968. That referred to setting up tribunals which would be "speedy, informal and inexpensive". We are not going back, however much hon. Members on either side of the House may wish it, to such loose tribunal arrangements.
	The regulatory impact assessment in the explanatory notes—which I know are not part of the Bill, but they attempt to explain the Bill's provisions—explains how some parts of the Bill will decrease costs and some parts will increase costs. As I said earlier, the issue is not merely cost, but quality of life. I have a slight difficulty with the explanatory notes, with which I am sure my hon. Friend the Minister will help me in due course: no source is given for the figures. Presumably the notes are taken from a more compendious document, but without that sourcing, some of the figures appear to be mere conjecture.
	When the Bill reaches Committee, assuming that it receives its Second Reading today, I ask the Minister to consider producing some dummy orders, such as those that were provided to members of the Standing Committee on which I was privileged to serve, which considered the Export Control Bill. Such dummy orders would flesh out the many provisions which allow the Secretary of State to make orders or regulations.
	The statutory dispute resolution procedure in schedule 2 is one such matter. The wording of the schedule on that procedure could and should be tightened, and I urge the Government to reconsider it. Arguably, the standards in the schedule are too low and below the current ACAS standard. The ACAS code was amended last year and appears in the ACAS handbook "Discipline at Work". The statutory floor in schedule 2 is lower than the standard that ACAS recommends.
	There is nothing in schedule 2 about informing employees of their right to be accompanied if they are members of a recognised trade union. The schedule does not state that the outcome of the disciplinary procedure should be transmitted to the employee in writing. There are four limbs to the procedure, only one of which, the modified grievance procedure, refers to the outcome being communicated to the employee in writing.
	Like my hon. Friend the Member for Aberdeen, Central, I have conducted industrial tribunals on both sides—for employers and employees—and like him, the first one that I did was for an employer, and I lost it. Those tribunals often grapple with different recollections of events. If only there had been at a crucial time a letter from an employer stating, "This is what I am doing, and this is why I am doing it," that would have helped a great deal.
	The crux of my problem with the Bill, which I am sure can be resolved in discussion with the Government and in Committee, is clause 34, to which my hon. Friend the Member for Manchester, Central (Mr. Lloyd) referred. The clause would overturn the Polkey case. In Polkey v. A E Dayton Services Ltd., the decision was made by the Judicial Committee of the other place in 1987. At the time it was said—I think that this is a contemporary quote from the late 1980s—by Michael Rubenstein, who some hon. Members will know is a distinguished commentator on industrial relations matters and is a long-time editor of the Industrial Relations Law Reports:
	"Failure to follow a fair procedure will now"—
	that is, after the Polkey case—
	"lead to a finding of unfair dismissal in a far higher proportion of cases. . . This, in turn, will re-emphasise to employers the importance of adopting a fair procedure before taking the decision to dismiss. That will lead to fewer employees being unfairly dismissed."
	I make no apologies to the House for getting a little technical. Some hon. Members might think that the matter ought to be dealt with in Committee, but the problem with clause 34 overturning the Polkey case of 14 years ago goes to the crux of what the Government are properly and laudably trying to achieve through the Bill—a statutory floor for disciplinary and dismissal procedures. The clause encourages employers to dismiss first and ask questions later.
	With the precedent of Polkey, the regime of the past 14 years required employers to do three basic things: to warn an employee if that employee was at risk of dismissal; to discuss what might or might not occur and what dissatisfactions the employer might have; and to consult the employee over dismissal. That is a pretty basic, low-level requirement. Even then, an employer could go before an employment tribunal and say that it would have been utterly futile to go through the procedure.
	The procedures post-Polkey and until the Bill were minimal anyway. Now the Bill introduces a sea change in the minimum standards, as set out in schedule 2, which all employers are to adopt as a floor, though employers can and should adopt better procedures, not least the ACAS code that I mentioned. The standards in schedule 2 will be reflected in the contract of all employees. Everybody is supposed to work together, but under clause 34 the employer can go along to the tribunal and say, "Well, it would have made no difference if I had gone through a proper procedure. I would have still fired the so-and-so."
	The employer can be lackadaisical and need not carry out a thorough investigation, the hearing and the internal appeal process can be a travesty, but the employer can go to the tribunal and say, "I would have fired the employee anyway. I don't like him," and get away with it. As far as I can tell, the increase in awards under clause 31(3) will not apply. Those are percentage uplifts, and a percentage uplift on nil is, of course, nil. It is unclear to me, and I hope the Minister will clarify this, whether under clause 34(3), an employee dismissed in those circumstances would get an award of four weeks' pay for the employer's failure to follow the minimum statutory disciplinary procedure.
	In the explanatory notes, paragraph 153 states that the get-out clause for an employer, if I may call it that,
	"will only apply for procedures that go over and above the 3-step procedures"—
	that is, the schedule 2 procedures—
	"that will now be part of the contract of employment."
	Search as I might, I cannot find that in the Bill—that the get-out applies only if the employer has a better procedure but says that he did not follow it. I hope that the Minister will clarify the matter.

Tony Lloyd: Does my hon. Friend agree that one way round the problem of the Polkey case would be to raise the minimum standard of the disciplinary structures to the level of the ACAS code?

Rob Marris: I agree that that would take us forward, but we would need to amend clause 34(2), which inserts new section 98A(2), which states that
	"an employee who is dismissed shall not be regarded for the purposes of this Part as unfairly dismissed because of failure by the employer to follow a procedure in relation to the dismissal if the employer shows that he would have decided to dismiss the employee if he had followed the procedure."
	My hon. Friend's suggestion would assist by raising the standard to that of the ACAS code, but that subsection drives a coach and horses through the Polkey decision. That is unfortunate and would have consequences not intended by either side of the House, particularly by the Government. That is the case because one of the effects would be to enable an unscrupulous employer to get around the procedure by saying, "I would have dismissed this so-and-so anyway," while the good employer who follows the procedure is more likely to be at risk.
	The summary of the regulatory impact assessment at the back of the explanatory notes states at paragraph 154 that employees will lose between £4 million and £6 million from the change. That is my interpretation of that paragraph. The median award for compensation in unfair dismissal cases in 2000-01 was £2,744. On that basis, the £6 million figure for losses to employees would mean that 2,200 employees were losing out. The £4 million figure produces a total of "only"—I put that word in quotation marks—about 1,450 employees. Thus, if I am reading paragraph 154 correctly, an awful lot of employees will still be losing out. I hope that my hon. Friend the Minister can help on that point.
	Unless I am misreading the Bill, it is a little unbalanced. Of course, it is always difficult to consider Bills, as one may misread them and Ministers will be much better read on them than me. None the less, clause 33 ensures that the Secretary of State can make regulations effectively precluding the making of a claim to an employment tribunal unless the employee has complied and done their bit on the schedule 2 procedures, which include statutory disciplinary procedures and so on. If I am reading the clause rightly, it therefore locks out the employee—the applicant who initiates the employment tribunal proceedings—but not the employer.
	Notwithstanding what Opposition Members say—one of them suggested that the Bill was tilting towards employees—that provision seems to tilt towards the employer. Through the pre-hearing process and so on, and depending on the regulations made by the Secretary of State, the employee can effectively be locked out and prevented from going to an employment tribunal at all. As it is employees who initiate employment tribunal applications, employers cannot be locked or freezed out in the same way, as they are the respondents.
	In conclusion, I find the provision on costs a little worrying, although I shall not comment on it in great depth. I think that a proportion of 242 out of 240,000 was mentioned in relation to costs orders. The order on vexatious litigant costs is very rarely used, although I obtained one against a respondent company in the employment appeal tribunal; indeed, I was very pleased, as the appeal was a vexatious one. None the less, the provision is very rarely used. It has a deterrent effect on both applicants and respondents, which is fine. One never knows how many people have been deterred and have not made the application, so in one sense the raw figures that have been given do not tell us a great deal.
	I would like the Government to address the question of preparation time. The tribunal can make an award in that regard, although it is unclear how it will do so. The Bill seems to be ambiguous as to whether the calculation will be made on the back of an envelope or whether there will be assessment-of-costs proceedings. None the less, the tribunal can in certain circumstances make an award against an applicant or respondent requiring them to pay the other side for its preparation time. The provision could include not only the preparation time of professional representatives, who would fall under the usual costs elements that have traditionally applied, albeit in a small number of cases, but, say, the time spent by a managing director in putting together the papers to fight what turned out to be a losing application.
	I hope that my hon. Friend the Minister can enlighten me on that point, especially as I am not aware of any other part of our legal process in which such a procedure is allowed. For the past 13 years, the bulk of my work has been in civil litigation, but it has also involved some criminal and tribunal work, and I have never come across awards for preparation time. As a solicitor, when I succeeded—I have to tell the House that I mostly did so, as one picks good cases and hopes to give good advice—my clients would recover my legal bill, but no form of recompense for the time that they spent on the case as clients.
	In a personal injury case, for example, much time could be spent by a client who has to go from their home in Wolverhampton in my constituency to Birmingham to see a specialist doctor, for an MRI scan or whatever, but they would not recover their time for going to Birmingham for a medical appointment in a personal injury case. When I failed to win in a case in which an employer was being sued, the employer's managing director did not add to the bill their time by including it in what used to be called taxation, but is now called assessment of costs. They added on their solicitors' time, yes, but not their own.
	This seems a very curious provision and I am very uneasy about it, especially as it could, I believe, involve up to £10,000. That may not be a lot of money to a large business, but it would be an awful lot to a small business or an applicant. I hope that the Government will explain that point, as I am very uneasy about this novel concept of recovering costs for preparation time.

Philip Hammond: Ever trying to be helpful, I think I am not mistaken in saying that the arrangements for recovering costs following planning appeals include the possibility of recovering preparation time. The hon. Gentleman might like to check out that point.

Rob Marris: I am grateful to the hon. Gentleman. I shall very happily check that point and I hope that I will do so with the assistance of the Minister.
	I was slightly taken aback when the hon. Gentleman intervened, as I was about to sit down anyway, having finished my remarks.

Hywel Williams: Thank you, Mr. Deputy Speaker, for giving me the opportunity to speak in the debate.
	Other hon. Members have welcomed the Bill and we in Plaid Cymru also welcome parts of it. I am sure that the hon. Member for Manchester, Central (Mr. Lloyd), who is leaving his seat, will be pleased to hear that. However, we also have some reservations. We welcome the proposals regarding parental leave, adoption leave, maternity pay and the equal pay questionnaire, among others, but we have reservations about the work-focused interviews for working-age partners of benefits claimants. We agree with the National Association of Citizens Advice Bureaux when it says that these plans could put vulnerable couples, including disabled people and partners who care for them, under pressure. We are also concerned that the inadequate minimum procedural standards for internal dispute resolution may become the only standards for employers, and we think that the proposal for costs awards might become disincentives. Those are, very briefly, some of the points that we want to make.
	However much we welcome the Bill, our welcome is qualified because of its failure to address the deficiencies of the Employment Relations Act 1999, specifically in section 16 and schedule 5. The Government have an opportunity to remedy an injustice and they have been pressed to do so, but they have failed to take advantage of that opportunity in the current Bill. The 1999 Act introduced additional protection against dismissal for workers engaged in lawful industrial action. Under the Act, it is unfair to dismiss employees taking protected action—that is, lawful, official action—unless it lasts for more than eight weeks and unless the employer has taken such procedural steps as are reasonable to resolve that dispute. After eight weeks, the protection lapses. In our view, that undermines the ability of workers with a just cause, who act reasonably and within the law, to oppose an unreasonable employer. Such an employer, who is determined to exploit the law for his purposes, can hang on for eight weeks and then sack striking workers.
	I want to illustrate my point with the Friction Dynamex dispute, which has already been mentioned, and has continued in my constituency for more than 30 weeks. The Friction Dynamex workers were the first to be sacked following the introduction of the eight-week period. Some hon. Members attended a lobby by the sacked workers and their supporters last Thursday, and heard their powerful, direct testimony, as well as speeches by Mr. Bill Morris of the Transport and General Workers Union, among others.
	The sacked workers are experienced and skilled long-term employees; many have 20 or 30 years' service. They have shown their commitment to the firm under several owners. For example, in the past five years, they agreed not to take a pay rise because of market conditions in their industry. They do not take strike action lightly.
	The current owner took over in 1997. He tried to impose a four-day week without overtime, attendance at meetings without pay, the removal of bargaining agreements and a no-strike agreement. After many fruitless attempts to negotiate with the employer, the union held a strike ballot. The workers went on strike entirely legally, and initially for only one week. I accompanied them on the morning that they returned to work. As they walked back, the employer personally went up to the gates and locked them out. That is the measure of that employer.
	The strike has continued for many months and the workers have conducted themselves with dignity and discipline. The union has tried to negotiate with the employer using the good offices of third parties, including the Advisory, Conciliation and Arbitration Service, and begun negotiations several times, only for the employer to pull back. Its efforts have been to no avail. In the meantime, the employer has recruited other workers from the unemployment register and continued his business.
	The workers have maintained a 24-hour picket and have the overwhelming support of the local community. In July, we held a march and a rally in Caernarfon. It attracted massive and unanimous local support and was one of most affecting experiences that many of us who took part have ever had. The community was united in support of its workers. For many of us, it called to mind the longest strike in the industrial history of our country: streic fawr y Penrhyn—the great strike at the Penrhyn slate quarry which lasted for three years, against a robber baron quarry owner, a nobleman who used every foul trick to break the workers' resolve and the community's spirit. The comparison with the current dispute is apt.
	What recourse remains to the Friction Dynamex workers after 30 weeks of determined action? They are taking their case to an industrial tribunal. However, they do not want a tribunal hearing but to work in fair and just conditions. In a well timed intervention, the hon. Member for Conwy (Mrs. Williams) called for a review to help them. However, a review will not help because they have been on strike for 30 weeks.
	At the lobby last week, Mr. Bill Morris told us that he had not expected a Labour Government to enact anti-trade union law. The Friction Dynamex dispute shows the woeful inadequacy of the 1999 Act to protect workers who are engaged in a lawful dispute. The shortcomings of the labour law means that bad employers, not the workers, are protected. Protection against unfair dismissal must be extended. If it is justified for eight weeks, it is also justified thereafter.
	The Bill might have been an opportunity to amend the 1999 Act and end the unjust eight-week rule. It unfortunately fails to do that.

Mark Tami: I declare an interest as a member of the Amalgamated Engineering and Electrical Union, which is soon to become Amicus. It supported me before the election.
	I welcome the Bill, which marks a positive development for employees and employers. It is disappointing to hear Conservative Members speak only about the rights of employers. They seem to ignore those of employees. When they are challenged to specify the so-called red tape that they would remove, they fall silent and appear incapable of answering the question.
	The provisions on union learning representatives are especially welcome and put that role on a formal footing. That will greatly enhance workplace learning and give learning representatives the status that health and safety representatives have enjoyed for some time. That should be warmly welcomed.
	It is a pity, and a verdict on British industrial relations, that we need to enshrine these rights in law, but it is clearly necessary because many companies refuse to accept the positive role that union learning representatives have. Given the new protections, however, I am confident that we shall see a substantial increase in the number of union learning representatives, which will be good for the country as a whole. Perhaps more importantly, the individuals who perform this demanding role will be able to receive the necessary training and support that they may have been denied in the past.
	I hope that, alongside these measures, the Government will publicise the value of learning representatives, because they provide an important service in the workplace. They are a vital part of the partnership process, and represent an approach that I am sure we all want to see promoted in British industry. Partnership needs to be fostered. It does not just happen by accident. In any partnership, all parties must play their part. Such partnerships need the unions and the employers, along with the Government, positively to embrace and endorse these proposals, rather than being reluctant partners in the process. The role of union learning representatives should, if properly encouraged and nurtured, assist businesses and industry to become more efficient and competitive. It is a positive role, not a negative one, as some Opposition Members have suggested.
	The provisions relating to paternity leave also give real meaning to an otherwise toothless right. For the majority of working people, the right to unpaid leave is not a right at all, because they simply cannot afford to take it. Although the rate set out in the Bill is relatively low—a maximum of £100 or 90 per cent. of earnings, whichever is the lower—it is at least a start, and is heading in the right direction. I hope to see further improvement in that level in the years to come.
	The changes to maternity pay also provide important improvements to the current level. Improvements to maternity pay and to adoptive leave and pay are long overdue. They go some way towards addressing the pay gap that still remains between men and women in this country.
	The proposals relating to dispute resolution are more difficult. The Government are right to tackle the issue, and to seek ways of encouraging conciliation and dispute resolution between employers and employees. As one who has always supported the partnership approach in industrial relations, I look forward to a time when all employers and employees share the same goals and aspirations. However, even in such an environment, we should not delude ourselves that disputes between employers and employees will not arise from time to time.
	I am concerned that the impact of making it more difficult for employees to pursue tribunal applications could be to encourage employers to maintain a more confrontational approach, rather than to reach an agreement. In saying that, we must accept that tribunals are facing an increasing volume of cases. This is a result of their extended role and of their perceived role as the appropriate forum for dispute resolution.
	In my previous incarnation as a trade union officer, I recall a number of cases in which employees ignored all the advice and recommendations of the union, the employer and everyone else, and regarded the tribunal as some kind of free chance to improve the offer on the table. Those are only a minority of cases, and ultimately it is the employees' right to do that. The result of such cases is that they do not get very far.
	Mainly, resolutions are achieved because of the backstop of tribunals. Perhaps the uncertainty over the outcome aids the process. It is believed, wrongly in my view, that tribunal applications are spiralling out of control and that the system cannot deal with the increased work load—if it is accepted that there is an increased work load. Employees are far more aware of their individual rights, which is surely a positive development, and we must not put more obstacles in the way of individuals making cases. Indeed, we must assist conciliation and agreement.
	In the first instance, therefore, we must provide much greater support and resources to the Advisory, Conciliation and Arbitration Service to help it with individual cases and collective problems. We must also properly fund the tribunal system to enable it to do the job that it is supposed to do. The simple fact is that the more we do to aid resolution rather than dispute, the less individuals will feel the need to resort to tribunals.
	I fully support the proposals on vexatious cases, which for far too long have wasted everybody's time and resources. A few have made a mockery of the system. There has long been a need to tighten up here, but obviously we must not put unfair barriers in the way of good cases.
	The statutory dismissal, disciplinary and grievance procedures should be broadly welcomed, although, as a number of hon. Members have said, much confusion would have been avoided by using the well-established ACAS code of practice, which has long been used by employers—even those who do not recognise trade unions. Employers are familiar with the code and it would have been a lot easier to adopt a process which everyone is aware and with which most people are happy.
	I welcome the proposals, but we need to address the position of employees who, for whatever reason—instant dismissal, perhaps—may have lost all confidence in a company's internal procedures. That is particularly the case when there is little realistic chance of a return to the workplace. Furthermore, although the proposals rightly oblige the employee to follow the correct procedures, they do not place the same weight of obligation on the employer to do likewise.
	If an employee is to be denied the right to apply to a tribunal for resolution until the internal procedures are complete, surely the employer should be under the same obligation not to impose change on the employee. Overall, the Bill is a step in the right direction, but we must address those specific points.

Angela Watkinson: I declare an interest as I employ two people in my constituency office in Upminster. I am not sure whether that qualifies me as a small business.
	As a mother and an employer, I have mixed feelings about the Bill, which is like the curate's egg—good in parts. It will be welcomed by new parents, but not necessarily by other employees, and I have reservations about the ability of businesses, especially very small ones, to cope with yet more regulations and duties.
	For me, least contentious is clause 1, which provides for a new statutory right to two weeks' paternity leave that must be taken within 56 days of the child's birth, provided that the employee has completed a qualifying period of 26 continuous weeks' service. That is accompanied by the right to return to work. I welcome the flexibility provided by the 56-day period.
	If the child is born in hospital, the mother may not return home during the first week—or until even later, if the birth was complicated. In the first few weeks other help is often at hand from grandparents, other family members or friends and neighbours. It is when the initial interest wanes that the father's ability to spend two weeks at home with his wife and child may be of greatest benefit. The mother may be recovering well, but the successive sleepless nights that occur so often in the early weeks can lead to exhaustion, and routine everyday tasks can seem a mountain to climb. Father and baby can also establish their own relationship during this time—something that has often been impossible in the past owing to lack of opportunity.
	I am especially pleased that adoptive fathers have been included in the provisions. The application and approval process relating to adoption is long and stressful, and usually follows many years of disappointment. It is absolutely right that social services departments and adoption agencies take the greatest care in matching children to parents. The child concerned may have experienced more than one unsuccessful foster or pre-adoption placement, and the settling-in process is not always easy. The opportunity for the adoptive parents, and any siblings, to spend time with the new child as a family will be enormously helpful.
	In most cases, 92 per cent. of the statutory paternity pay of £100—or 90 per cent. of the employee's average weekly earnings—will be recoverable by the employer. Small employers will be able to recover 100 per cent.
	Although the proposed arrangement will not impose a direct cost on employers, finding short-term cover for absentees is not easy. In practice, duties must often be covered by colleagues. A large helping of good will is needed, as employees without children, in particular, may resent having to perform extra duties and then not being eligible for benefits. They may also have caring responsibilities themselves, involving elderly parents or disabled family members.
	Clause 17 increases maternity leave from 18 to 26 weeks, followed by 26 weeks of additional maternity leave. New and adoptive mothers will be given up to a year's leave. That will pose an important choice to new mothers during periods when most households require two incomes to meet all their outgoings, but it will enable mothers to spend more time with their children and to be more flexible in their plans for a return to work.
	Having said that, I must add that small businesses will find it most difficult to accommodate employees by keeping jobs open—with no guarantee that those employees will return—while training temporary staff. A year's absence could present a small firm with considerable difficulties, especially when key staff are involved. That could, in the long term, deter employers from taking on female staff. The provision could therefore be a retrograde step for women of childbearing age, and for their employment opportunities. That is my main concern.
	At a job interview during, I think, the 1960s, I was asked whether I planned to have any children. Implicit in the question was the knowledge that, if the answer was yes, my prospects of being appointed would be nil. Such questions are not permitted now, but I foresee other means of excluding women from the workplace, particularly women who are judged likely to be planning a family.
	The duty to consider parents' requests for flexible working hours is not, I think, a suitable matter for legislation, as it could impose real management problems on a small organisation. Some employers already offer flexible working, and those that are family friendly will find it easier to acquire staff; but it should be remembered that the main function of an organisation is to produce goods or services. The job security of the whole work force, and the future viability of the firm, depend on its remaining in profit. I fear that an inevitable result of the Bill's enactment will be fewer job opportunities, especially for women; male employees will be seen as a more reliable and less complicated prospect.
	There is no doubt that the number of industrial tribunals has increased sharply in the past 10 years, from 30,000 to 130,000. It has almost become an industry in itself. A lowering of the qualifying period for unfair dismissal cases from two years to one has contributed to the increase. The CBI reports that the result is an average cost of £633 million per year to United Kingdom industry.
	The requirement for internal grievance procedures to be exhausted before an employment tribunal is permitted is a sensible step and should help to deter vexatious applications. I regret, however, that the proposal to charge applicants a modest amount for a tribunal claim has been dropped. It means that the claimant risks nothing, but a very small business could face a ruinous compensation claim.
	The Bill seems at first to be good news for women employees. However, if those perceived benefits are not good for employers, especially small businesses, the end result could be very different. The Bill increases a regulatory burden that has been accumulating over the past four and a half years. Businesses need to retain the flexibility and competitiveness that over-prescriptive legislation will damage. Parts of the Bill will, I think, upset the delicate balance between employees' and employers' rights and so be detrimental to the position of women in the workplace.

Russell Brown: Since their election in 1997, the Government's agenda has clearly been about social justice. Thankfully, social justice has been identified as a relevant consideration in the workplace.
	My constituency is very much a rural one, but over the years it has had a fair amount of manufacturing. My previous employer was ICI, for whom I worked for 23 years. Regrettably, not long after I was elected to this place, ICI decided to give up its polyester film business. Nothing can be done when multinationals take such major decisions. Although it was one of the few employers in the constituency that provided well-paid jobs with good terms and conditions, it was, as one might expect, not the backbone of a rural area. Small and medium-sized businesses usually sustain such areas.
	My constituency is seen as a low-pay area. The Government's social justice agenda, however, has ensured the introduction of a national minimum wage, which has meant so much to people. Additionally, the working families tax credit has assisted decent, hard-working families, and the new deal has been especially important for young people. Youth unemployment has decreased by about 70 per cent. in my constituency.
	Although disappointing, the loss of manufacturing jobs has not been the end of the world. Despite that loss, in the past five years unemployment has decreased by about 33 per cent. in my constituency. Moreover, although unemployment has increased in many other parts of the country in the past two months and although my area is recovering from the serious outbreak of foot and mouth disease, unemployment has continued to decrease in my constituency. We cannot, be complacent, though. We anticipate that, early in the new year, as is the norm, unemployment in our area will increase because of the vast amount of seasonal employment.
	Social justice, especially the opportunity to work, is giving people life chances. Nationally, the unemployment level is below 1 million and there are more than 1 million job vacancies. The Employment Service has the difficult job of matching individuals and their skills—or lack of skills in many cases—to vacancies. It is that issue of skill levels that I wish to address.
	Many people who enter work after a long spell of unemployment—or who have never worked before—have low aptitude, lack self-esteem and feel shunned by every system that operates. They have often been let down by the education system. Union learning representatives in the workplace assist those who, often through no fault of their own, have found it difficult to gain employment. That is one major advantage of the union learning reps and I am delighted that the Bill will, at long last, recognise the role that they can play.
	Business and industry have, over many years, recognised shop stewards and safety reps, and the need for them to have time off to perform their duties. Now we will see a similar recognition for union learning reps. Research suggests that they have a significant impact on increasing enthusiasm for learning among employees and employers. In particular, research has shown that union learning reps raise interest in training and development, especially among those with numeracy and literacy problems. ULRs share a level of trust with their members and can often engage those who would be embarrassed about admitting their learning needs to their employers or line managers.
	The majority of ULRs have been in post for only around two years and their role has been innovative and will continue to develop as time passes. They undertake a wide range of activities, including undertaking training needs analysis, providing information on learning, and advice and guidance to individuals, and negotiating with employers on the learning and skills that people require for their daily jobs. ULRs also often broker learning provision with training providers.
	The Bill provides for ULRs to be elected or appointed and to undergo training within a specified period. They will be entitled to reasonable paid time off for training and for carrying out their duties. They will also have protection against detriment, which has been vital for shop stewards and safety reps over the years.
	The measures in the Bill further to support working parents are to be applauded. Mothers will now be given up to one year off work and, for the first time, fathers and adoptive parents will have the right to paid time off. That will be warmly welcomed by adoptive parents who have for too long felt disadvantaged, but business will also be helped by having the rules governing maternity, paternity and adoption leave and pay simplified. There is a clear need to improve on the provision that we have had in the past. Improvements in maternity rights have assisted many families and households, but the Bill will deliver real change to help women and mothers in work more than ever before. The Bill also recognises the valuable role that fathers and adoptive parents play in caring for their children and supporting their partners. It will have a real impact on people's lives, benefiting business, parents and, above all, the ones who mean so much—the children themselves.
	My right hon. Friend the Secretary of State for Trade and Industry set up a taskforce on family-friendly employment policies in late June. I firmly believe that parents should have the right to work flexible hours when their children are young. I recently met a couple in my constituency whose son has a severe attention deficiency problem. It is not always possible to determine when a child with such a problem requires extra care and attention, but it is possible for a parent, in consultation with an employer, to ascertain when absence from work is required for case conferences or other meetings to discuss the child. Regrettably, my constituent is not receiving the co-operation of his employer, and is finding that taking time off work to deal with his son's welfare is costing him financially. He has endeavoured at each turn to co-operate with his employer, and has even offered to work exceptional hours to make up for the time that he has taken off.
	I urge my right hon. Friend the Secretary of State to take on board the recommendations of the working parents taskforce, which is chaired by Professor George Bain. I believe that she gave an indication earlier this afternoon that she would, and I hope that in future the right to request flexible hours will be given to thousands of workers.
	I turn now to fixed-term contracts. I used to be a shop steward, and I remember the time in the 1980s when about 60 per cent. of the work force who I represented were permanent staff, with the other 40 per cent. made up of people on short or fixed-term contracts. I intervened on the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) and asked if he had ever been involved with a work force in which short or fixed-term contracts were used. I assure the House that that is not a happy working environment, and I do not want to be involved in such an environment in the future. I regret that the despicable mechanism of short and fixed-term contracts is still used in this country.
	The European fixed-term work directive is due to come into force here in July next year. The Government's consultation exercise earlier this year on the implementation of the directive showed that fixed-term employees suffered pay discrimination. I am delighted that the Bill contains a power enabling the Government to make appropriate regulations, and that those regulations will be published in the coming months.
	I appreciate that other hon. Members want to make a contribution, so I shall end by saying that there is much in the Bill to be commended. I have mentioned only certain aspects of the Bill, and it will be a pleasure to support it in the Lobby this evening.

David Chaytor: I am pleased to be able to speak in support of the Bill this evening. First, I should declare an interest, in that I am a member of the Transport and General Workers Union.
	The debate has featured many excellent contributions in support of the Bill, but more striking still has been the absence of heat or passion in the debate. That is an indication of the degree of consensus among hon. Members, which contrasts with the debates on industrial relations legislation in the early and mid-1980s, the era of Lord Tebbit. It is evident that great progress has been made, and it is a tribute to the Government that they have built a consensus with regard to further reform of industrial relations legislation.
	It is also interesting that so few Conservative Members should have bothered to speak in the debate. Not one Conservative Back Bencher is in the Chamber at present, but I want to make particular mention of the contribution from the hon. Member for Upminster (Angela Watkinson). I have been a Member of Parliament for four and a half years, and today was the first time I have heard a Conservative Member speak with feeling about the responsibilities of child care and the difficulties encountered in balancing earning a living and rearing a family. I hope that the hon. Lady's contribution is a straw in the wind—an indication that attitudes in the Conservative party might be changing.
	Earlier in the debate, we heard the ritual quotation of the wisdom of Ms Lea, the spokesperson of the Institute of Directors, who opposes as a matter of course every small step forward that the Government take towards improving the security and welfare of people at work. Of course, Ms Lea always says that disaster is looming. When the minimum wage was proposed, she said that it would be the end of civilisation as we knew it. No doubt she would have said the same had she been alive when slavery was abolished. The ritual condemnation from the Institute of Directors of any new proposed legislation is rapidly leading to a loss of credibility in its ability constructively to criticise Government proposals.
	The response of the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) was depressing. His argument suggested that the Conservative party as a whole has moved on little in the past 20 years—arguably, in the past 140 years—because it still considered improving the loyalty of the work force, developing their morale, involving them as part of a common enterprise in support of the business, and investing in their future skills as a short-term cost rather than a long-term investment that would ultimately bring benefits to the enterprise as a whole. I find that view intensely depressing.
	The hon. Member for Maldon and East Chelmsford was also wrong when he said that the CBI opposed the establishment of learning representatives. It is clear that the CBI supports the principle of learning representatives, although it has one or two reservations about details in the Bill, such as the numbers of such representatives. I wish to express a note of caution about the CBI's comments on learning representatives. In its response to the Bill, it says that some companies with learning representatives have reported that they can play a useful role. That is not exactly strong enthusiasm; indeed, it is slightly patronising with regard to the contribution that learning representatives have made in the past few years.
	I make that point because I wish to speak primarily about the role of learning representatives, although other aspects of the Bill are important. For example, I applaud the provisions on maternity, paternity and adoption leave and the dispute resolution procedure. I have experienced industrial tribunals as employee and employer, and fully support the Government's attempt to reform the operation of industrial tribunals, but I feel most strongly about learning representatives. It is one of the most important initiatives in the Bill.
	Although I regret the CBI's lack of enthusiasm in supporting the principle of learning representatives, it has a point in expressing a reservation about the fact that the Bill does not specify the number of such representatives who can be established in the work force. That needs to be addressed in Committee. I do not share the CBI's views on wanting a voice in selecting learning representatives. I cannot see how any employer could possibly demand that it should be allowed to choose who should represent the trade union or the work force. However, the CBI has made a valid point about the numbers of learning representatives and the specification of numbers, given that the provision will lead to people having time off.
	In my previous profession, I had some experience of vocational training in the work force in many parts of the north-west. I can say, hand on heart, that without exception, the companies that had a deep-seated commitment to investing in and training their work force and encouraged the involvement of trade unions were among the most progressive and successful companies in the Greater Manchester area. I pay tribute to the various trade unions which took the initiative some years ago to establish the concept of learning representatives.
	As I said when I intervened on the Secretary of State, the Bill has in some respects been left a little behind by the rapidly developing debate about work force development. The performance and innovation unit today published its report on work force development. It expresses strong support for increased investment in this area. I shall briefly quote the summary of the report, in which the PIU argues that we should be
	"empowering individuals and employers to increase their demand for workforce development"
	and
	"tackling the barriers of time and money that prevent individuals taking up opportunities".
	I am not sure that, simply with the establishment of learning representatives, the Bill has fully risen to the challenge in the PIU report. Unless we can in due course—not necessarily in the Bill—establish a statutory right to leave from work for education and training purposes, exactly as we are now agreed on for maternity and paternity leave, we shall not begin to tackle the deep-seated skills crisis in the British work force. I hope that point can be considered in the Standing Committee. About 13 million British workers have no access to training. About a third of British workers have minimal skills in their chosen occupation. About a quarter of the British work force experience difficulties with literacy and numeracy. That crisis cannot be solved unless we have the right to paid education and leave.
	The Bill—or a future measure—should focus on workplaces that have no trade union recognition agreements. In my constituency, apart from the health, education and transport sectors, few employers have a work force of more than 200—I can think of only five or six. The vast majority of workplaces have no trade union recognition agreement. Among British workers, the least qualified, the least motivated to obtain new skills and those who hold the most insecure positions are in non-unionised workplaces. That is where we need to focus our attention. Almost by definition, workplaces that have trade union recognition agreements have relatively progressive employers who are committed to investment in their staff. In Committee, I hope that we can consider the position of non-union recognised workplaces.
	I applaud the Bill, and congratulate the Government on introducing an important improvement in the security of ordinary working people.

Kevan Jones: I declare an interest as a member of the GMB trade union and also as one of its senior officers for 12 years.
	I, too, welcome the Bill. It builds on some of the basic rights at work that were introduced post-1997, many of which were opposed by the Conservative party. Those rights have been popular with the public since their introduction. The contributions of Conservative Members show their dilemma: such measures are popular with the public, but Conservative Members are stuck in an ideological straitjacket and have to oppose them.
	Like my hon. Friend the Member for Bury, North (Mr. Chaytor), I welcomed the contribution of the hon. Member for Upminster (Angela Watkinson), who is no longer in the Chamber. The hon. Lady made a passionate and good speech in which she recognised the pressures on working parents. Unfortunately, her colleagues continue to hide behind the old language—that the measure will not provide basic human rights at work, but will result in red tape on business. They are falling back on the old mantra of the effects on small business.
	I do not accept that. The measure will provide basic human rights that people should have at work. People throughout Europe and the rest of the world have enjoyed such rights for many years and now, thanks to a Labour Government, people in this country can also enjoy them.
	I welcome the provision for paid paternity leave. As a trade union officer for 12 years, I know of the difficulties experienced by many fathers in getting time off work during the traumatic stage just after childbirth. In some cases, people were actually dismissed for taking time off. In 2001, that cannot be acceptable in a decent society.
	Statutory paid adoption leave is also very welcome. Hon. Members have already mentioned the long process that adoptive parents have to undertake. The extension of statutory maternity leave will also be very welcome to many working mothers in North Durham. Maternity leave, too, is a basic human right, not a privilege.
	My hon. Friend the Member for Alyn and Deeside (Mark Tami) mentioned that learning representatives will be put on a statutory basis. I totally agree with him that they can be beneficial to good industrial relations in the workplace. That is the approach that we should adopt—they will be good for business; they will not hamper it if they are introduced properly.
	I have some concerns about the Bill. The number of industrial tribunals has grown, as has been mentioned. During my time as a trade union officer, I regularly appeared at tribunals in Newcastle. I have a lot of experience of representing union members at tribunals. The problem is that some of the clauses are intended to try to reduce the number of industrial tribunal applications. That is the wrong approach. The best approach would be to consider the Leggatt report fully and ensure that we introduce some changes. One of Leggatt's key proposals—I totally agree with him—is that tribunals should not be turned into courts of law, but that is already happening.
	In my experience, taking the lawyers out of the process would make resolving employers' and employees' problems much simpler and quicker. I have some fond memories of representing a union member who worked for the Federation Brewery, but the case took 10 days to resolve. Frankly, it could have been resolved at an early stage, but the barrister was clearly not going to let it go once he had got his teeth into it. Clearly, that did not result in a better form of justice for the member or the company; it led to a lot of very expensive legal bills for the employer.
	I shall refer next to some of the clauses that I am concerned about, some of which have already mentioned. Clause 22(2) deals with compensation for preparation time, and here I agree with my hon. Friend the Member for Wolverhampton, South-West (Rob Marris). I am not sure how the time that the management spend preparing cases will be calculated. Clearly, that clause will not apply to trade unions. Trade union officers, who are often not legally qualified, are involved in a lot of work for industrial tribunals, but there is no clause stating that they can claim money for their preparation time. That is a way to discourage people from making applications, which is very sad and will cause more problems than it will solve.
	In my experience of industrial tribunals, pre-hearing assessments, which anyone can request, represent a way to sort out frivolous and vexatious cases. Those assessments can take place now, and there is no need to create further hurdles to stop people using their right to a judgment at an industrial tribunal.
	Similarly, under clause 25, the use of the IT1 form will be mandatory, but that is a mistake. Many people do not have access to those forms. In my experience, those who are not represented by trade unions find it difficult to get hold of them. I do not understand what is wrong with allowing employees who feel that their cases should go to industrial tribunals to put them in writing—obviously within the permitted time limits. Again, that proposal is being wrongly used as a hurdle to try to stop people gaining access to industrial tribunals.
	My hon. Friend the Member for Wolverhampton, South–West also referred to clause 29, which deals with the minimum disciplinary and grievance standards, which fall well below those of the Advisory, Conciliation and Arbitration Service. I would argue that the ACAS code is better and that the clause might cause confusion. I was always amazed by the number of employers, including many small businesses, who did not give contracts of employment to their employees. Insisting that people had contracts of employment would represent a better way forward.
	Clause 34 relates to the Polkey case, which my hon. Friend the Member for Manchester, Central (Mr. Lloyd) mentioned. The clause will create a legal minefield and it will give a lot of work to lawyers. The Polkey case was resolved after long and expensive litigation, and this clause is likely to produce something similar.
	Efforts need to be made to ensure that the Leggatt report and the lessons learned from it are fully implemented. Training for employees and working for compromise are the way forward. As my hon. Friend the Member for Alyn and Deeside said, we should also strengthen the role of ACAS by providing it with financial support and further statutory powers.
	I support the Bill. It builds on the basic human rights of people at work that the Government have introduced since 1997, always in the face of the Conservative party's opposition.

Philip Hammond: I draw the House's attention to my registered interests: I am the director of two companies, both of which fortunately employ people and hope to go on doing so in greater numbers in the future.
	I can probably safely say that this has been a fairly predictable debate. The Secretary of State opened it with a rather patronising tone towards business, and I am sure that employers will have picked up on that. Labour Members have sought to persuade the Government to tilt the playing field further in the direction of employees and trade unions, while Conservative Members have focused on the costs, both direct and indirect, that the Bill will impose and the consequences of them.
	This is a hotch-potch of a Bill with a number of different themes woven together. Some of those themes we can accept and we support what the Government are trying to do, but we have reservations about others. Time permitting, I shall say something about the specific merits and demerits of the proposals in each area.
	Before that, I wish to make two general points. The first is that the Bill follows what has recently become a familiar pattern. It is largely an empty box—a skeleton of primary legislation—the full impact and effect of which we shall not be able to judge until we see the regulations that should accompany it.
	Anyone reading the Bill without its explanatory notes will have little idea of the Government's intentions. The explanatory notes are exemplary in their clarity, but they are not part of the Bill; they have no legal or legislative force. Almost all the substantive comments made in the debate have related to the regime which the explanatory notes predict the regulations will put in force. If that is not an abuse of Parliament, it is certainly a poor use of Parliament's time. We will spend many hours in Committee scrutinising the primary legislation—the framework Bill—but if we are lucky, we shall have a maximum of only 90 minutes in a delegated legislation Committee for each set of regulations. That is not conducive to good scrutiny of a complex matter in which the detail in the regulations might critically affect the livelihoods and well-being of individuals and firms throughout the country.
	The hon. Member for Twickenham (Dr. Cable), who is not in his place, rightly concluded that the Bill was balanced between the interests that employers regard as important and those that trade unions regard as important. Labour Members have made a concerted effort to persuade the Government to go further in the direction that the trade union movement would like to go. However, it is important, when we consider the Bill in Committee, that we understand precisely how the Government intend to regulate so that we see what the Bill's effects will be. I therefore ask the Minister to assure us that he will make the draft regulations available to the Standing Committee so that we can consider the substance and not just the skeletal form of the proposals.

David Chaytor: Does the hon. Gentleman not accept that Labour Members have made the point that many employees are not members of trade unions and that we should consider their rights and job security as well? It is important to strike a balance between the work force as a whole and the employer, not specifically between the trade union and the employer.

Philip Hammond: The hon. Gentleman made an interesting and constructive speech, and I acknowledge what he says. It struck me that, without exception I think, every Back-Bench Labour Member who spoke declared a trade union affiliation and I detect a trade union agenda.

Kevan Jones: We are proud of it.

Philip Hammond: There is nothing wrong with that. Trade unions have their agenda and are entitled to pursue it.
	My second general point is that the Bill has to be set in the context of the torrent of legislation and regulations that have been having an impact on business. The legislative burden is cumulative and every individual measure, however worthy in itself, adds to that burden. It is no coincidence that since the Government signed up to the social chapter, Britain has fallen from ninth to 19th in the world competitiveness league, and productivity growth has gone from being above the G7 average to below it.
	The flexibility of British business—its ability to respond subtly and rapidly to changes in the economic environment which it faces—has been eroded by successive waves of regulation that impose direct and indirect costs on business. Small business is disproportionately affected by legislation like this Bill. We should never forget that small businesses comprise 99 per cent. of all businesses in this country. They employ 44 per cent. of the private sector work force and generate 37 per cent. of the output. Incidentally, they create virtually all the new jobs in the economy.
	I note that the Under-Secretary of State for Trade and Industry, the hon. Member for Edinburgh, South (Nigel Griffiths), who has responsibility for small business, has just joined us. The health and prosperity of small business is vital to us all, generating the wealth that underpins not only individual prosperity, but quality public services. We damage them at our peril.
	The lesson of many of our European neighbours has been that increasing the burdens associated with employment may benefit those who are fortunate enough to be in work, but that it is at the expense of those without jobs, and society as a whole, as firms slow down the rate at which they create jobs in response to any given economic stimulus. Other economies—for instance, Germany—have found it difficult to get back on the growth curve, because employers respond to economic stimulus in every way they can other than by hiring new workers, because of the burdens and rigidities that have been created in the work force.
	I am happy to acknowledge that we have not gone as far as some other countries in the European Union in creating disincentives to the creation of new jobs. There is no mistake, however, about the direction in which we are travelling, and it is becoming urgent that we debate the balance that is to be struck.

Tony Lloyd: I am grateful to the hon. Gentleman for giving way—I know he does not have much time.
	The hon. Gentleman and his colleagues often say that we should not regulate; instead, we should allow the best employer to operate the best standards and then hopefully the worst employers will improve. The small firms sector is essentially composed of domestic competitors. Does the hon. Gentleman accept that it is uncompetitive to allow the worst employers to operate bad practices and that it disadvantages the best employer?

Philip Hammond: The hon. Gentleman makes an interesting and good point, which I shall deal with in a moment. Below the legitimate small firm are firms in the black economy. Just as the large firm might think that it is competing against smaller firms with a competitive advantage, so the small firm is often competing at the margin against people who can undercut it by ignoring all regulations and paying no taxes.
	On the specific proposals, the most immediately relevant to those who will benefit from them, and to the employers who will have to cope with them, are the proposed extensions of rights to paid and unpaid leave for maternity, paternity and adoption. Clearly, in isolation, there are good reasons for seeking to increase the compatibility of family life with both-parent working. At the level of the individual, it increases choice; at the level of the firm, it is an important aid to recruiting and retaining skilled workers; at the level of society, we all benefit from anything that creates more stable, durable families in which children have a better start in life and are more likely to grow up with the skills that we need, to become fully contributing members of society.
	There is no doubt in my mind, either, that higher rates of statutory pay and longer periods of entitlement will help those employees fortunate enough to benefit, but we must not pretend that all that is cost free, because that would be disingenuous. All regulation in the workplace imposes costs, both direct and indirect, on employers, other employees and society as a whole. That is not to suggest that all regulation in the workplace is wrong, but simply to point out that business can absorb only so much in the way of cost burdens, and choices have to be made. That requires an open debate acknowledging that fact.

Kevan Jones: Which regulations does the hon. Gentleman consider appropriate, and which does he consider inappropriate?

Philip Hammond: We went through that earlier. Clearly, I would prefer the lightest possible regulatory regime, with the state interfering only where there is a very clear market imperfection or failure that will not correct itself. We have to be clear that there are winners and losers in any regulatory intervention in the freedom to bargain, whether individually or collectively, between employers and employees.
	Professor George Bain, who has been much quoted by Labour Members, said:
	"Very often it's a case of employee versus employee because one person's flexible working is quite often someone else's inflexible working".
	Covering for an absent colleague in a very small business may impose significant additional burdens on others in the workplace and may cause great unfairness. When the Government intervene in the employment relationship, flexibility is always lost. That includes the flexibility to recognise the fact that individuals have different needs. Many workers will not benefit from extended maternity or adoption leave or the extension of parental rights, but may have other equally important caring responsibilities. It is not obvious to me that they should effectively shoulder the burden of improving the situation of their colleagues who are parents. That is why the debate needs to acknowledge that there is a limit to the burdens that can be imposed on business and that priorities are now being set by default, without any debate taking place.
	There is no better example than part 1 of this Bill of legislation that can have a hugely disproportionate impact on the small business sector. The direct monetary costs to firms of implementing the additional pay and leave regimes will be small, and the benefits to the employee will be broadly the same in all cases. However, the indirect costs will often be significantly higher in small firms, perhaps outweighing the value of the benefit to the employee.
	Government impact assessments always assume that work is simply redistributed to cover for absence, but in many small firms that is simply not practical. An employer with two staff cannot effectively redistribute the work load of one of them. He may be able to recruit a temporary replacement, but the most likely outcome is simply that the firm's capacity will be reduced during the period of absence—the marginal order will be passed up and, in a service business, the extra customer will be turned away. The effect could be even worse in a business that has a worker with a key skill who is to take time off.
	As I told the hon. Member for Manchester, Central (Mr. Lloyd), the smallest businesses have to compete not only with larger rivals but, in many sectors, with foreign competitors and unfair competition from the black economy. The ability to be flexible and quick on their feet is their principal, and often their only, competitive advantage, and to stifle that advantage is to pull the rug from under the most dynamic sector of our economy; that in turn will impact on the rate of job creation.
	Of course, the Bill's provisions are incremental; viewed in isolation, their impact is probably manageable. However, they do not exist in isolation, and are part of a torrent that has swamped small business and shows no sign of abating. Undoubtedly, regulation in the workplace has a cost that affects new job creation. There is therefore a debate to be had in society about the extent to which we are prepared to trade a reduction in the economy's job-creating capacity, which is detrimental to people who are not in work, for improvements in benefits for those who are in work. In my judgment, that debate is being stifled by the Government, who deny that those choices exist.
	On the other hand, I am glad to be able to give a broad welcome to the other main strand of the Bill—the proposals to improve dispute resolution and tribunal procedures—although we are disappointed that the Government already appear to have bowed to union pressure and are clearly under considerable pressure from their own Back Benchers to tilt the playing field further in favour of the employee in tribunal proceedings. We want to explore a number of doubts further in Committee and I look forward to having the opportunity to do so. However, those doubts do not detract from the worthwhile attempt to achieve a better balance between the rights of employees to access a tribunal and the right of an employer to manage his business without vexatious or frivolous cases being brought.
	I am unable to extend to part 4 my broad welcome for parts 2 and 3. The proposal to impose on employers a requirement to recognise and provide time off to unlimited numbers of union learning representatives without having any say in their selection or appointment smacks once again of a pay-off to the Government's union paymasters. Union learning reps can play a valuable role in the workplace, but that depends on the consensus that underpins their placement. The idea that the benefits experienced in some workplaces as the result of consensus can be extended to all workplaces by compulsion underlines the intellectual poverty of the Government's regulation-oriented approach.
	I could go on to talk about the gold plating of the European Union fixed-term workers' directive in clause 45, but the point has been well made by a number of other Members.

Andrew Turner: Will my hon. Friend give way?

Philip Hammond: I will not, if my hon. Friend does not mind, because I must give the Minister plenty of time to reply to our interesting debate.
	One issue that we want to explore in Committee is whether the measures on fixed-term workers are a genuinely misguided attempt to protect a group of workers who, on the whole, do not appear to need protection, or whether, as a Government Member may inadvertently have given away, there is a hidden agenda that seeks to stamp out unconventional forms of working relationships. The most controversial and significant clause is not yet in the Bill, but we all know that it is coming, hopefully during the Commons stages; it will deal with the right to consideration of an employee's request for part-time work. In its present form, the provision was described by Mr. Bill Morris as "a pyrrhic victory". From what we have witnessed so far this evening, it is apparent that the Government will come under enormous pressure from their own Back Benchers to turn the right to consideration of a request into a right to part-time working. On the face of it, the right to serious consideration of a request is innocuous enough, but it has the potential to become a serious threat to many smaller businesses if it develops into a right to part-time working. We shall seek a clear and unambiguous assurance from the Government that that will not be allowed to happen.
	It is a political fashion for all parties to claim to put promotion of enterprise and the pursuit of competitiveness high on their agenda, which of course is a huge advance on the position just 10 years ago. However, the rhetoric changes more rapidly than the reality. The reality is that the Government are instinctively regulatory. The Chancellor this afternoon signalled that there was a raft of further burdens on the way. The Government talk the talk of deregulation, but last year alone introduced 3,865 new regulations—the highest number ever.
	Now the Government—the largest and probably one of the least enlightened employers—have the temerity to lecture business on good practice, which they say is in business's own interest. The Bill has about it the unmistakable smack of the man from Whitehall knowing best. The Opposition remain unconvinced that regulation is the only or the best way to improve workplace morale and to secure better working relationships. Indeed, it is clear that an over-prescriptive regulatory regime could damage workplace relationships, especially in smaller businesses.
	We accept that the broad objectives of the Bill are mostly well intentioned and, taken individually, may not appear to impose an unacceptable burden, but taken in context, they add to the burden of new regulatory compliance, administrative obligations and organisational inflexibility under which the camel of small business is currently buckling. We must scrutinise with the utmost care every additional straw that the Government propose to heap on its back.
	We all aspire to a high-wage, high-employment economy, but we in the Opposition believe that we must generate the wealth before we distribute it. After three successive quarters of manufacturing recession, when business across all sectors is reeling under the seemingly unstoppable flow of new regulation, when the global economy is heading into a sharp downturn, and when jobs are being lost at an accelerating rate across UK industry, now is not the time to impose any new burdens which will make it less likely that Britain's economy will weather the gathering storm.
	The Bill will increase burdens on business, reduce the competitiveness of British industry and cost jobs. I therefore urge my hon. Friends to support the amendment in the name of the Leader of the Opposition.

Alan Johnson: I begin by declaring an interest: I am a member of the Communication Workers Union. It is a one-way process: I pay the union about £12 a month, and I receive nothing but the joy and pleasure of being a member of that great union.
	Comments about the camel of small business have given us on the Labour Benches the hump. I have been trying to weave in a reference to the Foreign Secretary, but I have failed in the short time available.
	As the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, the debate has been rather predictable. It amazes me that although there is a new trade and industry Opposition Front-Bench team, nothing has changed. Listening to the contributions of the two Opposition Front-Bench spokespeople—spokesmen—one would not believe that we were discussing a Bill that will increase statutory maternity leave to 26 weeks.
	We have been part of a World Health Organisation drive since the 1990s to encourage mothers to breast-feed for the first six months of their baby's life. We are extending statutory maternity leave to 26 weeks, increasing statutory maternity pay, which has been around the £62 mark for years, to £100 by 2003, and introducing statutory paternity leave. Anyone whose wife or partner had a child 20 years ago will remember that the woman spent a week to two weeks in hospital. Now, a woman who goes into a maternity unit is lucky if she is there for 20 to 30 hours. [Interruption.]
	This might seem amusing to Opposition Members. I see that there are two women on the Opposition Benches. Judging by the contribution of the hon. Member for Upminster (Angela Watkinson), which I shall deal with shortly, it is high time that the Opposition had more women to represent the views of mothers.

Gregory Barker: rose—

Alan Johnson: I shall not give way just yet.
	We are talking about a Bill that introduces paternity leave and adoptive leave for the first time. Adoptive parents get no help whatever and we are trying to encourage them to work so that we do not have to keep children in care. Those must be laudable aims, but the Opposition meet them with the same sort of basic derision that we have heard time after time in such debates. We try to establish basic civilised minimum standards in the workplace and the Opposition oppose that at every turn.
	Before I turn to the points made by those on the Opposition Front Bench, I should like to deal with some of those made by Back Benchers, who made extremely interesting and well thought out contributions to an important debate. My hon. Friend the Member for Stoke-on-Trent, North (Ms Walley), whose constituency I had the pleasure of visiting, raised the important issue of the equal pay questionnaire, which is part of the Bill but was mentioned very rarely. The questionnaire may make a small contribution towards closing the gender gap between men and women's pay. My hon. Friend also expressed her concerns about costs awards. Many examples have been received of cases in which people who were not legally represented were hampered and hounded by lawyers suggesting that the £10,000 was available in more than only vexatious cases. We have had enough such examples to announce in our response to "Routes to Resolution" that we will examine the operation of the costs regime and ask the employment tribunal system taskforce to consider the matter. My hon. Friend made an important point about the location of employment tribunals, which the taskforce will also consider in its deliberations.
	Furthermore, my hon. Friend was also one of several Labour Members who mentioned the three-step procedure and their fears that it may interfere with the ACAS code of practice. Our view is that the three-step procedure is a minimum standard. In terms of introducing the procedure into all businesses, including small businesses, which would have more difficulty coping than some larger businesses, we think that a basic three-step procedure is right. The employment tribunals will still use the ACAS code as their benchmark and we will work with ACAS to ensure that the basic minimum procedure is user friendly. My hon. Friend made a number of other detailed points, so I hope that she will excuse me if I cannot get around to all of them.
	The hon. Member for Twickenham (Dr. Cable), who explained to me that he could not be present for the winding-up speech, spoke about the all-work test. I need to refute the point that was made. He said that the Bill forced partners of disabled people to take an all-work test and to seek work. In fact, it provides encouragement for partners of disabled people, who will not be forced to take a medical test or required to seek work. The requirement is to attend a work-focused interview, whose purpose is to ensure that partners have the opportunity to discuss their work options and to be made aware of the support that is available to them.
	My hon. Friend the Member for Aberdeen, Central (Mr. Doran), who is present in the Chamber, has long experience of these issues. Indeed, his experience as a lawyer underlined his contribution. He spoke about the way in which tribunals have changed since they were first introduced and about getting away from that. The original idea was that they would be formal but not legalistic or intimidating. We have moved a long way away from that idea and my hon. Friend made an important point in that respect. I do not know whether it is ever possible to get back to the original concept. None the less, the Bill and our response to "Routes to Resolution" encourage use of the ACAS arbitration scheme that has been in place since May. We also encourage fixed conciliation and fast track, and ask the ETS taskforce to consider how we can improve tribunals for users in particular. That will be a large part of the taskforce's work.
	My hon. Friend the Member for Aberdeen, Central also mentioned the fixed-term work directive. My hon. Friend the Member for Manchester, Central (Mr. Lloyd) picked up on that point. We believe that, because of its nature, that directive should apply to employees. We believed that the part-time workers directive should apply to workers because of its nature. One of the nine unanimously agreed recommendations of the Bain taskforce is that the right to request flexible working should apply to employees, not workers. Many of my hon. Friends have made the point that that confusion should be tackled. As my right hon. Friend the Secretary of State said, we can use a provision in the Employment Relations Act 1999 to review the complicated worker-employee issue. We will start work on that early in the new year.
	My hon. Friend the Member for Aberdeen, Central mentioned the Leggatt report. We do not want the proposals to suffer from planning blight. Leggatt makes a useful contribution, but it covers the whole tribunal system, not simply employment tribunals. We need to move on with the proposals.
	The hon. Member for Hertford and Stortford (Mr. Prisk) made the second excellent contribution that I have heard from him in the past few days. He also spoke on Friday when I was present. He made an important point about single fathers. The parents of young children, including single fathers, will have the right to have their request for flexible working seriously considered by their employers.
	The hon. Gentleman asked us to exclude small family businesses from the provisions. I was not clear to which provisions he wanted that exclusion to apply. Did he mean the right to maternity leave, to increased maternity pay, or to paternity leave? Did he mean the employment tribunal proposals, which Conservative Front-Bench Members welcomed? They are specifically designed to help small businesses, which usually end up in a tribunal because they have no basic procedures in the workplace.

Mark Prisk: Will the Minister give way?

Alan Johnson: I have no time now, but I shall consider giving way later.

Michael Fabricant: The Minister has nine minutes.

Alan Johnson: The hon. Gentleman has not been present in the Chamber to listen to the important contributions.

Michael Fabricant: On a point of order, Mr. Speaker. The Minister accurately said that I had not been in the Chamber, but he inaccurately suggested that I had not been following the debate. I have been following it on the Annunciator.

Mr. Speaker: That does not really count.

Alan Johnson: I knew that the hon. Gentleman was part of the "No Turning Back" group, but I did not realise that he was part of the no turning up group.

Mark Prisk: rose—

Alan Johnson: I cannot give way, but I am dealing with the point that the hon. Gentleman made in the debate. He said that we were gold-plating the fixed-term directive. Conservative Front-Bench Members also made that point. Other member states already have or are expected to pass legislation to prevent pay and pensions discrimination against fixed-term employees. Laws to implement the directive in Germany and France have already been passed.

Mark Prisk: On a point of order, Mr. Speaker. I have been named by the Minister but not allowed to respond. I believe that there is a convention about that.

Mr. Speaker: It is up to the Minister.

Alan Johnson: It is not called naming, but responding to a contribution. The hon. Gentleman will learn as he goes along.
	My hon. Friend the Member for Manchester, Central made the important point that he abhorred anti-parent rhetoric. I was surprised at the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). Of all Opposition Front-Bench Members' arguments, claiming that other employees resented the parents of small children getting maternity leave and pay and parental leave was one of the worst.
	We conducted the widest consultation on the document and talked to hundreds of employees—thousands through their representatives. That issue was not raised once. No employees said that they resented parents having time off to spend with their children. Everyone has a stake in ensuring that children are raised properly. Of course people who did not have children said that they also wanted flexible working hours. That is why we have established the work-life balance initiative. It is also the reason for all our work to spread best practice in this area.
	My hon. Friend the Member for Manchester, Central also raised the point about the no-difference test in the employment tribunal proposals. We are saying that if an employer who has met the basic minimum standards—having a grievance and discipline procedure in the workplace and having given the employee written terms of their employment—makes a mistake on procedures beyond that, and if, in the view of the employment tribunal, that would have made no difference to the outcome of the case, it should not count against them. That seems fair. Indeed, if we do not introduce this measure, we may discourage employees from moving to the ACAS code of practice from a more complicated procedure.
	The hon. Member for Bexhill and Battle (Mr. Barker) and my hon. Friend the Member for Wolverhampton, South–West (Rob Marris) made important points. The important but rather esoteric point relating to the detail of the employment tribunal proposals will best be left to the Committee. My hon. Friend the Member for Wolverhampton, South-West made a point about the right to be accompanied, the response to which I need to read into the record. We intend that the right to be accompanied will apply to the basic grievance and discipline procedure. That needs to be understood by my hon. Friend.
	The hon. Member for Caernarfon (Hywel Williams) used the case of a serious industrial dispute to score cheap political points. This Government did not, at any stage, introduce anti-trade union legislation. There has never been a case in which employees could not be sacked by an employer for taking industrial action. Employers had either to sack them all or take them all back on. That was not something that Thatcher introduced in the 1980s; it has always been the case. We introduced measures—I do not remember Plaid Cymru opposing them—to ensure that workers were protected for eight weeks, and that if the employer had made no attempt to resolve the dispute, they remained protected from dismissal. The hon. Gentleman was, therefore, quite wrong.
	This has been a fascinating debate, not least because it has exposed the new approach of the Conservative Opposition to the issue of rights and responsibilities in the workplace. They were against the minimum wage; they abolished the wages councils; they refused to consider parental leave as a point of principle; they refused to sign the social chapter; and they imposed burdens on business in their vindictive and spiteful attack on free independent trade unionism.
	I will give the Conservatives an example of a burden on business. They introduced the provision that every company, big or small, had to write to its employees every time it gave them a pay rise, to remind them that if they paid their union dues through check-off, they had the right to withdraw. The Conservatives insisted that every employee should be re-recruited to the union every three years. That was a burden on business, introduced for a completely different reason.
	Now, after two general election drubbings and nine defeats in nine by-elections, the Conservatives have a new tack. They remain the only mainstream centre-right party in Europe to oppose basic minimum standards in the workplace, but they disguise their hostility by describing civilised standards for women on maternity leave, for adoptive parents and for parents of small children as burdens on business.
	The Conservatives now manage, in the words of their reasoned amendment, to
	"welcome measures which promote family friendly practices in the workplace"
	while opposing this Second Reading. This subterfuge will be as unsuccessful as their previous attempts to block family-friendly policies.
	We have aligned the rules for maternity leave and pay so that the same qualifying condition and the same notice periods apply for both. In other words, we have made it much easier for employees—and, of course, employers will also benefit from the measures. I therefore ask the House to support the Second Reading of the Bill.

Question put, That the amendment be made:—
	The House divided: Ayes 134, Noes 311.

Question accordingly negatived.
	Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading):—
	The House divided: Ayes 307, Noes 131.

Question accordingly agreed to.
	Bill read a Second time.

EMPLOYMENT BILL (PROGRAMME)

Motion made, and Question put forthwith, pursuant to Order [28 June]:—
	That the following provisions shall apply to the Employment Bill:

Committal

1. The Bill shall be committed to a Standing Committee.

Programming of proceedings

2. All proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further message from the Lords) shall be programmed.

Proceedings in Standing Committee

3. Proceedings in the Standing Committee shall (so far as not previously concluded) be brought to a conclusion on 22nd January 2002.
	4. The Standing Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

5. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion at Nine o'clock on the day on which those proceedings are commenced or, if that day is a Thursday, at Six o'clock on that day.
	6. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at Ten o'clock on the day on which those proceedings are commenced or, if that day is a Thursday, at Seven o'clock on that day.
	7. Sessional Order B (programming committees) made by the House on 28th June 2001 shall not apply to proceedings on consideration and Third Reading—[Mr. Stringer.]
	The House divided: Ayes 294, Noes 134.

Question accordingly agreed to.

EMPLOYMENT BILL [MONEY]

Queen's recommendation having been signified—
	Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with bills),
	That, for the purposes of any Act resulting from the Employment Bill, it is expedient to authorise:—
	(1) the payment out of money provided by Parliament of—
	(a) any expenditure incurred by a Minister of the Crown or government department under the Act,
	(b) any increase attributable to the Act in the sums which under any other Act are payable out of money so provided;
	(2) the payment into the Consolidated Fund of any increase attributable to the Act in the sums payable into that Fund under any other Act.—[Mr. Stringer.]
	Question agreed to.

PROCEDURE COMMITTEE

Ordered,
	That Mr. David Drew be discharged from the Procedure Committee and Mr. Iain Luke be added.—[Mr. Stringer.]

PETITION
	 — 
	Meriden Gap

Caroline Spelman: I have been asked to present a petition about the future location of the national football stadium. One of the proposed sites is in my constituency on greenbelt land known as the Meriden gap. It is a narrow strip of land five miles wide between Coventry and Birmingham and there is very strong local feeling about the possible siting of such an amenity on green-belt land on a point between two major conurbations. More than 2,000 signatures have been collected and the petition urges
	the Secretary of State for Culture, Media and Sport to reject this proposed development on Green Belt land to ensure the continued protection of the Meriden Gap from such developments for present and future generations.
	And your Petitioners, as in duty bound, will every pray.
	To lie upon the Table.

"WOMEN EMPOWERING WOMEN" SCHEME

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Stringer.]

Anne Begg: I suppose I should begin by explaining what the women empowering women scheme is. It is not, as the title suggests, an organisation that is aimed at helping women looking to climb the promotion ladder and hoping to break through the glass ceiling, nor is it a company offering assertivees training to women, nor is it the latest feminist craze. The name is very misleading. The scheme should not have been called women empowering women. If I were to call it women exploiting women, women defrauding women or even women setting out to con other women out of lots of money, the House would have a much better idea of what this so-called giving scheme is all about.
	The scheme has been rampaging through the Aberdeen area since the summer, leaving behind large numbers of women who are now up to £3,000 in debt. That is why I was keen to secure an Adjournment debate to highlight just how insidious and invidious the scheme is and the dangers that it poses.
	What is the scheme? Perhaps it would be easier to understand it if I described it as a pyramid selling scheme that does not involve any hard work such as selling anything. Women are enticed into the scheme with the promise that if they hand over £3,000, they could get £24,000 in return. The women enter at the giving level when they hand over the money and then move up the pyramid to the receiver level when they get the pay-out.
	The women are told that they cannot lose, that everyone is a winner and that it would be foolish to give up such a chance to obtain some extra money. The groups meet in each other's houses and the excitement means that it is very difficult to resist the hype. There is always someone there who has already won lots of money. However, that can happen only if there is a ready supply of new people with £3,000 to enter the scheme.
	It does not take long for the supply of victims in an area to dry up, leaving the vast majority of those who have entered with little or nothing. For every person who gets £24,000, there must be at least eight others who get nothing.
	My attention was drawn to the scheme in July when the Aberdeen newspaper, the Evening Express, ran a large spread about the excitement that the scheme was generating and named some of the people involved. They included a local police woman. The newspaper pointed out the dangers of the scheme and showed graphically how it was impossible for everyone to be a winner and how quickly an area could be saturated.
	I had believed that the scheme had run into the sand or had moved to another area, but it appears that it began in the Isle of Wight and has worked its way north. However, I was shocked to discover in late October, when The Press & Journal in Aberdeen ran another story, that the scheme was still running. I heard stories of men being recruited to the scheme—it had now changed its name to "friends empowering friends"—and I was given a leaflet that was delivered to doors in Aberdeen and Aberdeenshire and that encouraged women to part with £100 to get £800 back.
	All that smacked of desperation. The people who had been suckered into the scheme were desperately trying to get their money back any way they could. That is why I raise the issue now. It is the lead-up to Christmas and many women, including single parents, are desperate for money. They are being conned into believing that if they get their money into the scheme now, they will have extra money for Christmas.
	I am very concerned that women who are already in financial difficulties are still being sucked into the scheme. None of them can possibly be a winner at this late stage. The winners are long gone; they won back in the summer. Those who are entering the scheme now are at the bottom of the pyramid and will never get their money back, far less win. It is sad speaking to the women who have lost out. They swallowed wholesale the belief that they could not fail, that the scheme was well run and that there would be an endless supply of new people willing to "invest", as the schemes call it, their money.
	What I have found most insidious about the scheme is that it is wrapped in the cloak of women helping each other by investing in each other. Many of the early participants were intelligent women with good jobs. They had to be because they had to be able to put £3,000 into the pot and be willing to take the risk of losing it all. For those women, it was more like a gamble: they accepted that they might lose, and presumably they could afford to. It was not, however, the early participants who lost, but the poorer women they tricked into following them who could not afford the stake money in the first place, far less afford to lose it.
	I also wonder about the morality of the so-called winners. They must know that in order for them to have won, a number of others must have lost. I wonder whether they have no conscience about exploiting others and possibly even their friends. I do not suppose that they declared their unearned income to the tax man either.
	One of the women I spoke to said that the heart group that she joined had changed the rules as it went along. She had received no money and was puzzled that it could be allowed to do that. It was difficult explaining to her that it was a con from the start: if no money was being created, it was bound to run out if people were winning. In the early days some women praised the scheme because in this cynical day and age it was wonderful that women were trusting strangers with large amounts of their money. The trust did not last long, and if only they had been a bit more cynical they may have recognised the scheme for what it was—a complete fraud.
	The woman that I spoke to on GMTV had invested a total of £600 in two different schemes and is yet to win anything, but she still has faith that she will soon get more than £2,000 back. "I've made lots of new friends," she said, and I wondered how long they will last when she loses her money to them, or they lose to her.

Simon Thomas: I am sure the hon. Lady is aware that the scheme is nationwide. It is called the hearts scheme in my constituency where it has had a similar effect to the scheme in Aberdeenshire. Does she agree that the scam, which is in fact women impoverishing other women, is based on ignorance? Although the scheme is not illegal, and it remains to be seen whether the Government will make it illegal, it would be useful if local trading standards officers were given clear instructions on how to dissuade people from joining it. At the moment, the scam is feeding off the ignorance of women and some men, and surviving on the back of that. Perhaps we could do something to overcome that ignorance.

Anne Begg: I intend to ask the Minister whether the scheme is illegal under existing legislation, and I have several questions that I will pose later. The hon. Gentleman is right when he says that ignorance is the problem, but it is difficult to educate people about such schemes. No matter how much I said to the woman I met this morning about how the scheme cannot work, how it will run out and how there is no possibility of her winning, she did not believe me. It was difficult to persuade her that the arithmetic did not add up. Indeed, some areas are blaming the scheme's collapse on the bad publicity. They have not realised that it cannot succeed and cannot work.
	I requested an Adjournment debate on the scheme for two reasons: to highlight the evil, as the hon. Gentleman said, and to generate more publicity to warn those who are contemplating getting involved of the dangers. I hope that trading standards officers in each area are doing that. Many local newspapers such as mine in Aberdeen have been useful and helpful in highlighting those dangers, although that has not always worked.
	My second reason is that I want to ask the Government to ensure that there is effective legislation. I want such schemes outlawed. I know that the Government cannot legislate to stop people's greed, but many of the women now being drawn into the scheme are not greedy. Some just want to make a bit of extra cash so that they can get more for their kids this Christmas, and they are victims of a very clever con, which has fooled many intelligent people.
	I know that the DTI has posted a warning about such schemes on its website, and although I am sure the website is extremely popular, it is not exactly a means of mass communication. Women in Aberdeen and the woman to whom I was talking this morning still have faith in the scheme simply continuing. They do not believe the warnings, but will always believe the hype. The Evening Express and The Press & Journal in Aberdeen have run a number of stories pointing out the dangers and giving dire warnings, but people are still joining the scheme in the north-east of Scotland. Education alone will not be enough, which is why we need to consider legislation.
	I know that the Government outlawed the running of pyramid schemes in the Trading Schemes Act 1996, and regulations under that Act came into effect in 1997. I know also that the Minister, in a previous guise as the Minister for Competition and Consumer Affairs, issued a press release on 15 February 1998 with the headline "Griffiths Warns Against Get-Rich-Quick Schemes". Although my hon. Friend now has a different remit, he is obviously still interested in the issue.
	The regulations passed under the 1996 Act govern schemes involving the supply of goods and/or services. However, I understand that the intention of the Act was to outlaw money circulation schemes. That is borne out by an article in The Times of 6 February 1997, so this Government do not get the blame, but a previous one do. The article said:
	"New regulations aimed at stamping out fraudulent 'money circulation' scams come into force today".
	If that was the intention of the 1996 Act, why has no case been brought against schemes such as "women empowering women"? Is the existing legislation defective in some way, or has it simply never been tested in court? If the Act does not apply, will the Government reform it to outlaw these odious schemes once and for all? The answer seems to hinge on the reference to providing goods and/or services.
	It appears that some states of the USA have managed to legislate so that not only do those who originate or organise the schemes fall foul of the law, but it is illegal merely to participate in them. Under article 23 of the New York General Business Law, anyone participating in such a scheme can be charged with the commission of a crime and any money received by them can be confiscated. The Texas Deceptive Trade Practices Act defines an illegal pyramid promotion as a plan by which a person gives a consideration, usually money, for the opportunity to receive money that is derived primarily from a person's introduction of other persons to participate in the plan, rather than from the sale of a product. If the USA can do it, surely we can too. Perhaps we already have the legislation. I await the Minister's reply.
	I appreciate that anything that the Government do will not change things overnight and it will not help those of my constituents who already face a bleak Christmas because they were duped into believing that they were investing in something that could not fail. Inevitably, it has failed, and badly. The experience of the hon. Member for Ceredigion (Mr. Thomas) suggests that it has failed all over the country. It has left behind far more losers than winners.

Nigel Griffiths: I congratulate my hon. Friend on securing this debate, on her excellent research and on her clear presentation. The whole House understands the concerns that have led her to raise the matter. She speaks not only for her constituents but for the many people who may have been duped by such schemes.
	The Government are certainly concerned about the risks inherent in gifting schemes such as "women empowering women". As my hon. Friend spelt out, the danger of such schemes is that they depend on each participant recruiting several more to the scheme. I pay tribute to David Perry and The Press & Journal for highlighting the problems of such schemes and alerting people in the area and throughout the UK to them. A network of participants cannot expand indefinitely and will eventually break down. Participants joining a scheme late in the day stand a good chance of losing their original contribution as well as any chance of a return. Even those who join early may lose out if those whom they recruit to the scheme fail to recruit further participants.
	No doubt, some people go into such schemes in full knowledge of the risks, but the Government are concerned about those who participate unaware of the risks; those who are misled by others when invited to join; and those who risk money that they cannot afford to lose. Earlier this year, specific warnings about the scheme were issued by trading standards officers. My right hon. Friend the Secretary of State for Trade and Industry, who has ministerial responsibility for women, commended the Department of Trade and Industry for reinforcing that.
	I want to reiterate the message that I gave three years ago in the House warning the public of joining any scheme that promises something for nothing. That message was recently reinforced by the Department and the media. Indeed, earlier this year, my right hon. Friend added to those warnings. Sadly, some people have ignored all the advice about schemes that promise something for nothing. My right hon. Friend said that the Government would consider avenues for protecting the public from such schemes.
	The "women empowering women scheme" received a great deal of media attention earlier this year. It appears to have emerged first on the Isle of Wight, and spread to other parts of the United Kingdom. It claimed to be restricted to women participants and operated by participants making a gift of £3,000 to a member of the network; they handed over that money in the expectation of receiving multiples of that amount as others joined the network.
	Against that background, my right hon. Friend asked the Secretary of State for Culture, Media and Sport to consider such schemes in the context of possible changes in the legislation in response to the review report. The Culture Secretary confirmed that the case for changes to current gambling legislation to act against schemes such as "women empowering women" would be considered in the context of the follow-up to the review of gambling legislation. Of course, any changes in that area are likely to require primary legislation. In the meantime, I join my hon. Friend the Member for Aberdeen, South in urging women to avoid participating in any scheme that appears to promise something for nothing.
	I am aware that the media speculated on the number of women who joined the scheme, but accurate figures are hard to come by. The way in which the scheme operates, by means of separate and independent gifting groups, makes it impossible to make any realistic estimate of the numbers involved. In the summer, a survey revealed that local trading standards offices across the country had received about 170 inquiries or complaints about the scheme, but that provides no reliable basis for assessing the number of people who handed over £3,000 in anticipation of collecting a lot more in return for little or no effort.
	The scheme has been referred to as a form of pyramid selling or a pyramid investment scheme. Both descriptions are inaccurate. The scheme was considered carefully by trading standards officers, the Financial Services Authority and the DTI. It did not purport either to trade in goods and services or to generate profit and income from investment.
	The consensus of the enforcement officers, backed by legal opinion, is that the scheme operated as a form of chain letter and was outside the scope of legislation covering trading schemes, pyramid selling or investment services. The variety of descriptions highlights the difficulty of effectively defining a type of scheme that appears to be new to the UK and outwith the scope of current legislation.
	Of course, all schemes where money changes hands are subject to the general criminal law on fraud, theft and deceit. Evidence of criminal behaviour is a matter for investigation by the police. In the case of the "women empowering women" scheme, promotional material has avoided using language capable of being interpreted as fraud or a definite promise of a return. So far as is known, no evidence justifying investigation by the police has been presented. None of the approaches to local trading standards offices included evidence of fraud, theft or deceit, and no satisfactory evidence has yet been produced.
	It is apparent from the media coverage that many participants in the scheme acknowledged the risks inherent in it, but treated it as a form of gambling. Arguably, many participants saw no harm in taking such a gamble. Others may have seen no harm in making a gift—

Anne Begg: I accept that there are women who know that the scheme is a risk and a gamble, but there are others, particularly those who come in at the end of a scheme, who may not get the warnings or who, because the amount of money that they can invest has reduced to such an extent, think that the scheme is a sure-fire winner. Those are the most vulnerable women and probably the ones who have been most fraudulently treated.

Nigel Griffiths: My hon. Friend makes an entirely reasonable and cogent point. I can only hope, with her, that anyone who was on the dole, in stricken circumstances or on a very low income did not manage to gather the £3,000 to invest in the scheme and was, perhaps, exempt. Some, undoubtedly, were not.
	I am aware from the media of the number of people thought to have joined such schemes, but accurate figures are hard to come by. The way in which the scheme operates, by means of separate and independent gift groups, makes it impossible to reach any realistic estimate of the numbers involved. I know that a survey of trading standards officers across the country during the summer revealed about 170 inquiries and complaints about the scheme, but that provides no reliable basis for assessing the number of people who handed over £3,000 in anticipation of receiving a lot more in return, apparently, for little or no effort.

Simon Thomas: The Minister is accurately setting out the problems posed by the scheme and how difficult it is to ascertain the extent of it, the involvement of individuals and how culpable they are when they join the scheme. Does he accept from me the point that was also made by the hon. Member for Aberdeen, South (Miss Begg)—that despite the difficulties, such schemes have been made illegal in several states such as New England? If the Government took account of that in their review of gambling law, it would send a clear message to back up the good advice already issued by the Government that people should not touch such schemes.

Nigel Griffiths: My hon. Friend asked me to make it clear that we will consider any prosecutions in New England and any changes in the law. I can give her a clear guarantee that we will do so. The point is well made. Our problem is framing the law to address such an alleged abuse.
	The scheme, unfortunately, did not purport to trade in goods or services or to generate profit or income from investment. Someone has suggested uncharitably to me that there are a lot of mugs out there who will be suckered into such schemes—into giving up £3,000 for no promise of any return. I make no value judgment on how the scheme was sold and I condemn such opinions, but the consensus among enforcement officers, including trading standards officers and the like—this view is backed by legal opinion—is that the scheme operated as a form of chain letter and was therefore outside the scope of legislation covering trading schemes, pyramid selling or investment services. The variety of descriptions highlights the difficulty of effectively defining a type of scheme that appears to be new to the UK and outwith the scope of current legislation.
	Of course, all schemes in which money changes hands are subject to general criminal law on fraud, theft and deceit. Evidence of criminal behaviour is a matter for investigation by the police. In the case of the "women empowering women" scheme, promotional material has avoided using language that is capable of being interpreted as fraud or a definite promise of a return. So far as it is known, no evidence justifying investigation by the police has been presented. None of the approaches to local trading standards officers has included evidence of fraud, theft or deceit.
	We know that there is a danger that, by changing or introducing legislation too quickly in response to a particular scheme in one form, we may open the door for some unscrupulous people to develop new variants that succeed in evading the law. In practice, it is not possible to introduce new legislation in response to every new scheme or variant of a scheme that comes along, so in the long term it is better to consider carefully whether legislation is the right approach and, if it is, what form it should take.
	That is the approach that the Government are taking. We obviously want people to be protected against losing their money, but we do not want new situations to produce a bad effect. When my right hon. Friend the Minister with responsibility for women issued her warning about the scheme earlier this year, she explained that the Government would be considering very closely the avenues for tackling schemes of this sort. We are looking at the approach that is likely to be adopted in other countries, specifically in Europe, and also, as has been mentioned, in the USA. The evidence gathered to date is not completely conclusive because of the differences between the legislation of member states and between federal and state legislation in the USA. There is evidence that some member states and some states in the USA would regard the "women empowering women" scheme as a form of gambling. The fact is, however, that some may not regard it as such.
	As hon. Members will know, the review of current gambling legislation chaired by Sir Alan Budd presented its report during the summer. Schemes such as the "women empowering women" scheme did not fall within Sir Alan's remit and he made no specific recommendation about them. Such schemes may, however, be relevant in terms of the strong concerns that he noted about lottery and other scams to which people can fall prey, many of which originate outside the UK, as the "women empowering women" scheme appears to have done. Sir Alan recommended that lotteries should be for the exclusive purpose of good causes.
	Against that background, my right hon. Friend the Minister with responsibility for women asked my right hon. Friend the Secretary of State for Culture, Media and Sport to consider such schemes in the context of possible changes to the legislation in response to the review report. The Secretary of State has confirmed that the case for changes to current gambling legislation to act against schemes such as WEW would be considered in the context of the follow-up to the review of gambling legislation. Of course, any changes in this area are likely to require primary legislation.
	In the meantime, I join my hon. Friends and other hon. Members in urging people, and especially women, to avoid participating in any such scheme that appears to promise something for nothing. The Government are determined to take on board all the arguments that have been advanced in the debate and to take whatever actions are practicable and appropriate.
	Question put and agreed to.
	Adjourned accordingly at nine minutes past Eleven o'clock.